How and why AI may shape credit card processing and what you need to know.

Artificial intelligence (AI) is no longer just the stuff of science fiction books and movies. From Chat GPT to bots, from automated vehicles to virtual online security gatekeepers, AI has already become a part of our everyday lives. But just how will it affect payment processing and credit cards?

What is AI?

AI is an umbrella term that describes computer programs and other technology that mimic human thought processes. But unlike our organic brains, AI is capable of processing staggering amounts of data at a lightning pace. With the data it gleans, an AI system can then make predictions and decisions that will shape products and their delivery. Here are just some of the ways the industry will be revolutionized in the very near future.

Ultimate personalization.

As we indicated above, AI has the ability to gather and interpret all types of information very quickly. It can then help a merchant or credit card provider to tailor customized offers and promotions to each customer based on their shopping history and spending behaviors. Additionally, it can offer suggestions about which cards to use in order to maximize their rewards.

Fraud detection.

The power and efficiency that AI employs to analyze data to enhance the shopping experience can also be used to foil cyber thieves. The online security landscape is always changing with criminals constantly innovating new ways to usurp firewalls and hack into networks. Fortunately, AI is keeping up with this fast pace.

In the next decade, credit card fraud costs will surpass $400 billion. Fortunately, AI’s data analysis can help banks to detect and act upon suspicious transactions in real time. Unlike manual fraud detection methods, AI’s fraud detection can read patterns and make predictions before bad actors even have a chance to implement their plan, allowing for highly effective preemptive strikes from merchants and their credit card processing provider.

Smarter credit card scoring.

The card companies use data about a consumer’s income and spending behaviors to arrive at a credit score, changing it over time as the person’s individual situation warrants. AI’s speed and efficiency in data gathering and interpretation will make this process more accurate, using patterns and trends that human analysts might never identify. For example, AI can analyze a person’s financial behaviors and make predictions about how they will affect their future credit worthiness. As a result, it can suggest ways a person can improve their credit score, such as specifying which debt to pay off first and setting up a payment schedule.

Giving additional insights to lenders.

AI can provide a wealth of information that lenders can use to make better decisions. For instance, it can analyze alternative data including employment history and online spending behaviors to determine whether they should extend credit to a customer with little or no credit history.

Enhanced customer service.

Already, consumers are becoming accustomed to AI-powered chatbots. These automated systems serve as effective means of answering simple queries and triaging more complex issues to the appropriate human representative. The result is added efficiency and a streamlined experience.

In the next few years, these AI chat components will continue to learn from past interactions in order to improve their responses. Before long, consumers will have difficulty judging whether they are talking to a bot or to a human being.

Predictive analytics.

Credit cards have become a staple for the vast majority of American consumers. However, it can be a challenge for them to decide which card offers the best rewards, lowest fees, and interest rates. Using its data capabilities, AI can make accurate predictions about the best options by comparing the features of multiple card options to determine which will be the best fit.

As a merchant, you can rest assured that AI is already having a positive effect on the way you accept payments.

AI and payment processing: today and tomorrow.

If you use smart terminals, mobile card readers, or any other type of point of sale hardware and software to take customers’ payments, you may already be benefiting from AI. That’s because this technology can gather data about a customer’s transaction history, location, and device and use it to create a risk score. If that number is high, the customer’s payment can be flagged for additional investigation.

Additionally, AI can efficiently gather valuable information such as which items are being bought and by whom, how much a customer is spending and their overall satisfaction level. By harnessing these details, AI can help merchants to create the optimal personalized shopping experience.

The bottom line.

Consumers often express reservations about technologies that take humanity out of the shopping experience. However, artificial intelligence actually may have the ability to enrich buyers’ relationships with the companies with whom they do business. Although the data collection and interpretation may be accomplished by an automated system, the predictions it arrives at are tools that humans can take advantage of in order to creatively grow their retail operations.

If you are a merchant who is interested in finding out how AI can be integrated into your operations, your first move should be to discuss it with your current credit card processing provider. It is quite possible that they are either already implementing AI now or will be doing so in the near future in order to optimize the way they process customer payments.

If you get a sense that your processing company is lagging behind its competitors when it comes to AI payment processing, it’s time to start shopping around. The market is packed with options, many of which are committed to being at the forefront of AI innovations. Take some time to research your options, and you are sure to find a processing company eager to partner with you in growing your business with the help of AI.