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The Impact of AI on the Payments Industry in 2021 | VisaNet +AI

As many payments companies still struggle to deal with large quantities of data, otherwise described as Big Data, there have been some interesting developments in the ecosystem that will dramatically shift the landscape of payments.


How AI is transforming Payments

With the launch of VisaNet +AI, we are seeing Visa in this particular case take matters into their own hands and develop products and services that are targeted at improving the services provided by their own clients, who are not able to keep up with the pace of technological advancement. 

For a long time we have known that data is the new oil, and that companies who wish to stay competitive in today’s landscape, need to take aggressive steps into ensuring that their strategy, infrastructure and processes are data-driven. However, within the Payments industry we know that a lot of companies are still struggling to do so.

"companies who wish to stay competitive in today’s landscape, need to take aggressive steps into ensuring that their strategy, infrastructure and processes are data-driven"

VisaNet +AI, which is a set of network services that helps deliver smarter authorization, clearing, and settlement for banks, merchants and consumers, is a great example of how companies should work on improving their core services.

For years, we have worked with issuers, acquirers and merchants to drive through that the performance of their authorization is at the core of what payments should be. However, many issuers today still deal with outages in their processing capabilities, acquirers struggle with providing their merchants adequate daily settlement forecasts, and both lack the ability to predictively provide them with data about their processed transaction statuses. 

VisaNet +AI, provides three services targeted at issuers, acquirers and merchants, namely Smarter Stand-In Processing, Smarter Posting, Smarter Settlement Forecast. The most interesting out of those, is Smarter Stand-In Processing (STIP), smarter because it is an AI-based improved version of Stand-In Processing, a long standing technology provided by Visa to support banks in authorizing transactions when their systems are down, they deal with buggy software or natural disasters. 

From Rule-based Systems to AI-based System (STIP)

The AI in this particular case, uses a branch of AI called Deep Learning that roughly mimics neurons in the human brain and is an underlying technology that is often used in self-driving cars, voice-enabled assistants and facial recognition. For those in the payments industry having been on the other side of a transaction (with the acquirer), it can be extremely frustrating if transactions get declined without any got reasons (Do Not Honour). Issuers using Smarter STIP, will benefit from it when their own systems are down, as it will detect this and ensure transactions are still approved or declined. The biggest change from STIP to Smarter STIP, is the natural progression from Rule-Based Systems (STIP) to an AI-Based System. 

As consultants in the Payments industry, it continues to amaze us how much issuers, and acquirers let the Schemes and Tech companies do the innovation for them. Where most issuers, and acquirers process millions to billions of transactions every year, too often do we see them sitting back and not putting in the Research and Development to make their own internal systems better, leverage upcoming technologies, and launching new products. 

Within the Payments industry we applaud companies like Stripe, Apple and Klarna for developing innovations or introducing new products, while some of the largest financial institutions in the world are still wondering how they can actually store and process the data they work with.

With projected spend on AI to rise from $7.1 Billion in 2020 to $14.5 Billion in 2024, according to IDC, we too often see companies going from one extreme, lack of control of their data, to wanting to be fully AI driven. 

At PaymentGenes Consultancy, we understand the urge to join the AI race, and therefore work closely with Financial Institutions and Merchants, to ensure they develop new strategies, and products, that use Data at their core and grow along the Data Science Maturity Model for lasting success and innovation.

If you are interested in learning more about how PaymentGenes Consultancy can help your company apply AI into its Core Systems, reach out to us for a free company assessment.

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