Key Takeaways:
- GenAI is relevant for both service providers and end users
- GenAI drives scalability and efficiency
- GenAI has massive self-improvement and integration capabilities
Introduction
The digital payments lifecycle has evolved significantly since its inception, with total transaction value expected to reach USD 17.72 trillion in 2024 according to Statista. This has partly been made possible by a constant evolution in various technologies, such as data encryption, biometric authentication, magnetic secure transmission, near-field communication, blockchain, artificial intelligence and machine learning.
In this article, we will focus on the benefits of an intersection between GenAI and the payments lifecycle, the challenges in realizing these gains and how to maximize this intersection.
Understanding GenAI
GenAI (Generative AI) is a type of AI in which software models examine large amounts of data to create new content that includes images, text, videos, and other forms of data. These models establish patterns in training data and generate new content within specific boundaries or continuously enhance results based on new learnings from previous tasks. GenAI is commonly used in writing, research, and graphics design, among other fields.
How Can GenAI Improve the Payments Lifecycle?
To understand how GenAI fits into the payments lifecycle, we need first to establish the major aspects of this lifecycle. These include:
- Selection of a payment method
- Entering/ingestion of payment details
- Encryption and sending of payment details to the payments processor
- Request from acquiring bank to issuing bank seeking payment authorization
- Performing applicable logical checks, such as checking for sufficient balance (including fees), existing transaction limits, eligible destinations, etc.
- Sending funds to merchant bank less the fees upon meeting all requirements
That being said, GenAI can enhance the payments lifecycle from two perspectives; the service providers and end users.
Service Providers
For those that handle digital payments, incorporating GenAI can:
1. Improve Customer Support
With chatbots and virtual assistants, customer support teams can delegate more straightforward tasks and have more time to solve complex issues. More tickets are covered faster, thereby increasing efficiency. Other tools like AI video generators can help personalize messages on a large scale, saving time while still achieving resonant communication.
2. Refine Marketing Content
Whether it's the actual payments user interface or complementary channels like email, the payments lifecycle involves prompts and other messages. GenAI can help produce copy, images and motion graphics for numerous purposes.
These may include notifications about discounts tied to specific payment methods, quick demos, receipts and cautionary messages about security. Such content can help usher users through the payments process in a faster and safer manner, subsequently enhancing the overall experience.
3. Spur Ideation for New Features
Payments product teams can rely on large language models and other GenAI tools as “brainstorming partners” with whom they analyze user behavior and answer questions on product development. This can increase the pace at which they shuffle through ideas, design detailed concepts and iterate when prototyping for new functionality.
GenAI can also offer insightful analyses on routing transactions and provisioning resources like labor and computational power more cost-efficiently.
4. Provide Synthetic Datasets for Module Training
Where teams lack adequate user data for training modules like fraud detectors or are constrained by regulations, GenAI can produce synthetic datasets. With some adjustments, these data and AI solutions can closely emulate real-world scenarios and desired test cases.
End Users
While GenAI can deliver a significant return on investment for institutional clients, it also has great potential in the hands of individual end-users. When packaged for retail-level usage, GenAI can:
1. Facilitate Research for the Best Payment Options
GenAI can help people with more intricate payment needs, such as importers and travelers, in finding the best payments processing options. This ranges from finding the fastest processors to those serving several destinations. It could also extend to getting merchants with the largest variety of payment methods and discovering the most compliant processors.
2. Provide Expenditure Reports for Better Planning
GenAI can present spending patterns in a manner that enables users to devise plans for saving or achieving specific financial goals. For instance, they can offer actionable tips on how to interact with payments processors in smarter ways, especially regarding subscriptions.
3. Boost Payments Security
GenAI can create more secure passwords for user accounts and continuously update them. These tools can also handle other administrative tasks involved, such as labeling, storage, producing additional authentication codes, etc.
4. Customize Automations for Payments Efficiency
GenAI helps users set up custom instructions for handling recurring payments (utilities and subscriptions) and initiating conditional payments. These may happen when discounts are detected, prices move past certain marks or dosages are completed.
5. Improve Tracking and Dispute Resolution
By offering new ways for users to access transaction metadata, GenAI can foster greater alignment of the user and service provider’s view during and after payment. Users will have an easier time determining the cause of delays, locating their funds along the journey to the recipient and more.
Challenges in Applying GenAI in the Payments Lifecycle
Though GenAI is very promising within the payments landscape, some factors could hinder its progress, such as:
Training
Knowledge gaps amongst the workforce and difficulty learning how to use GenAI tools
Cyberattacks
Introduction of new cybersecurity loopholes since some GenAI tools may not be very secure
Money
Expensive licenses or subscriptions for GenAI tools that keep them out of reach for smaller service providers
Best Practices for GenAI in the Payments Lifecycle
Here are a few practices worth adopting to increase the chances of maximizing GenAI tools in the payments lifecycle:
- Explore multiple tools before committing to one and occasionally alternate them (especially in creative cases where you need unique marketing copy and visuals). Identify areas that need bespoke solutions and those that can do with off-the-shelf solutions.
- Conduct thorough training to ease adoption and maximize a tool’s potential, particularly in cases such as customer support.
- Revise automations administered by machine learning models to ensure all updates are relevant and functioning properly.
- Institute strict cybersecurity policies on handling secrets, including passkeys for GenAI tools within an organization, and clarify individual permissions.
Case Studies and Success Stories
In one of our recent partnerships, Betsson, a Swedish online gambling company, needed more diverse payment integrations covering multiple jurisdictions. They also wanted to incorporate an automation layer to enhance the user experience across 20 brands.
Using a blend of AWS, .NET Core and Kafka, we developed a more secure and scalable payments system, processing millions of transactions across several Betsson brands daily. Not only did we significantly reduce downtime and bolster business continuity, but we also helped fine-tune their delivery management processes by resolving communication and calibration blockers through agile techniques.
The Future of GenAI in the Payments Lifecycle
As GenAI and the payments lifecycle become more intertwined, we may see more:
1. Integration with Supplementary Services
GenAI platforms could become more comprehensive, connecting to services like escrow and insurance. Some may also incorporate special features such as real-time sustainability scores for various payment processors.
2. Proactive Automation
In the future, we might see a shift from fixed intelligent automation presets to proactive ones that continuously learn and find safer and more efficient payments approaches.
3. Marketplaces for User-Created Automations
As more users create their own payments-oriented automations thanks to low/no-code development, we might see them being sold on marketplaces. With stringent quality assurance protocols, more users might pay for what someone else has already made.
4. Deeper Integration with AR, VR and other Emerging Technologies
With areas like spatial computing taking off, we might see more GenAI tools designed to blend with augmented and virtual reality tools. For example, a person may be able to wear a VR headset, walk through an e-commerce store presented like a physical store, tap on any product and view relevant payment-related information, such as which payment methods offer discounts or paying in installments.
Explore Ciklum’s GenAI Solutions for the Payments Lifecycle
To learn more about how GenAI can enhance your payments lifecycle, contact us today.
