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AI brings new anomalies that are indicative of fraud. It provides continu-
ous monitoring and real-time analysis to identify anoma-
opportunities lous transaction patterns and then take appropriate action.

It also provides enhanced identification, authentication
to payments and authorization through tools such as biometric recog-
nition and multi-factor authentication (MFA). These capa-
bilities enable banks to detect and prevent fraud in near
real-time. Ultimately, AI will learn fast and will be able to
predict possible threats better than humans.

AI enhances know your customer (KYC) risk assessments
by analyzing engagement among customer accounts,
merchants and banks to detect suspicious activity. It can
assign risk scores to customers based on factors such as
location, transaction history, account balance, spending
patterns and more. It then can require extra verification
processes for customers it deems higher risk.
By Victor Orlovski
R136 Ventures AI further supports KYC through monitoring activities
such as checking that a business's description provided
commerce continues to grow unabated. The by the merchant is consistent with its website content. AI
global ecommerce market is projected to grow may be able to perfectly distinguish human activities ver-
from $5.2 trillion in 2021 to $8.1 trillion by 2026. sus other algorithms.
E The number of digital buyers worldwide will
also jump from 1.3 billion in 2014 to 2.6 billion at the end Next, AI improves speed and efficiency. It automates
of 2023 (see http://tinyurl.com/mup9bth6). And the footprint transaction processing to improve customer satisfaction,
of e-commerce is expanding as well. Today, social com- automatically categorizes and analyzes transactions, en-
merce, i.e., purchases made on social media networks, is abling banks and merchants to better track spending be-
rapidly growing, with sales expected to top $144 billion by havior; forecast revenues, inventory and staffing; and to
2027 (see http://tinyurl.com/23422u5z). analyze purchase trends. It also automates repetitive op-
erations, both reducing errors and making more human
And cyberfraud continues to plague ecommerce as well. resources available.
E-commerce merchants in North America and Europe
spend 10 percent of total revenue on fraud management. Creating a more personalized experience is another way
Their peers in APAC countries spend 15 percent and those AI strengthens the payment infrastructure. It enables mer-
in LATAM countries, 19 percent. Merchants lose $207 for chants to make more customized offers and banks to offer
every $100 of fraudulent orders, including wholesale, ship- additional banking products to their customers, both of
ping and fulfillment, chargeback, and processing costs which increase transaction volume.
(see http://tinyurl.com/na8ahptt).
AI-driven customer service can answer many of the most
The increase in transaction volume, continued high rates commonly asked questions regarding payments, refunds,
of cyberfraud and consumers' interest in a more seamless status of transactions and more. This results in higher cus-
payments process create the need for new levels of pay- tomer satisfaction as well as reduces bank and merchant
ments innovation. The integration of artificial intelligence costs. Some AI tools already make it extremely difficult to
(AI) addresses all three trends and has the promise to dra- impossible to realize that the customer is interacting with
matically improve the payments experience for consum- a machine not a human.
ers, banks and merchants.
Finally, AI is a valued capability in lending to provide
However, AI can also be used by fraudsters to improve the more comprehensive risk assessment in real-time. It can
means of fraud especially in the area of social engineering. analyze large amounts of data to assess the risk associated
Thus the AI revolution will continue a never ending race with lending to specific individuals or businesses, while
of fraud generation and fraud prevention. But let's focus also providing better assessments that can result in more
now on a positive aspect of AI. educated lending decisions.

AI strengthens payments infrastructure Examples bring AI in payments to life
AI improves the infrastructure of payments in five key ar- To underscore the benefits AI can bring to the three key
eas. First, it reduces fraud. AI ingests enormous datasets players in payments: merchants, banks and consumers,
and applies advanced algorithms to identify patterns and below are two examples of AI in payments at work:
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