By Adam Atlas
Attorney at Law
Perhaps more than was true for earlier technology advances, it's hard for us to imagine today exactly what AI will do to the payments landscape. As a follower of some developments in AI and a legal adviser in payments, some possible issues arise that perhaps merit review for ISOs and payment processors.
I have asked ChatGPT to produce various marketing pitches for merchant services and Dall-E to produce images for the same. The results are at times excellent and also absurd. ISOs using AI to generate content should keep in mind they are responsible for the content they publish.
More specifically, the payment network rules mandate ISOs to sell merchant services under a name that is registered with them and sponsored by a member bank. Through its hallucinogenic creations, AI is able to create content that runs contrary to the rules for solicitation of merchant services by, for example, making claims that are not true.
ISOs that use AI-generated marketing should carefully review and edit content to see that it is consistent with the marketing guidelines of their acquiring bank and processor.
Once upon a time, processors and ISOs hired copywriters to write blogs, tweets and blurbs. Some of those writers will be replaced with AI-generated content. Europol, in charge of law enforcement in the EU, predicts that by 2026, 90 percent of the internet will be AI-generated (see "What will stop AI from flooding the internet with fake images? By Shirin Ghaffary, Vox, June 3, 2023, www.vox.com/technology/23746060/ai-generative-fake-images-photoshop-google-microsoft-adobe).
On the bright side, making use of AI tools is not limited to large, big-budget businesses. Any ISO can accelerate content creation with AI. A small investment of time into learning how AI tools work can yield a substantial return in terms of the quantity and possibly the quality of new content created.
In this sense, smaller ISOs have a shot at competing with large processors for business because the cost of content generation is leveled, to a degree.
Our firm uses AI to assist with drafting and review of documents, and we have participated in negotiations where counsel opposite us sent us documents that were commented on by AI. In other words, we use machines and work opposite machines as lawyers in our work for payments companies.
This experience has shown us a couple things. First, AI-generated legal writing is not perfect—indeed it can often miss the point or even draft contrary to the interests of the client. Second, AI-generated contract review is full—and I mean really full—of time-wasting, nitpicking comments that are likely to slow down legal negotiations if it becomes more common.
Lawyers who use AI to comment on contracts might believe they are saving time by farming out the work to AI, but they are—in my experience—sometimes digging themselves into a hole of lengthy and time-wasting negotiations over immaterial bits of language in the contract.
As we know, spell check might give you the correct spelling of a word, but the word itself must be reviewed to see that it is actually the correct word. Similarly, legal work done by AI needs its own reality check to verify that the content meets that intent of the parties.
For now, at least, judges and juries remain human. While courts will generally honor the contents of an agreed business contract, they may also take other factors into consideration when adjudicating a dispute between parties, particularly when the contents of the contract are not clear.
Lawyers using AI to quickly, neatly and efficiently square away legal relationships should pause to consider what a court would say about the content of the legal terms used.
The human element of justice may also play a role in considering the playing field of AI versus human interactions. For example, if a merchant is bombarded with a torrent of AI-generated websites and reviews promoting a given payments solution, does the supplier of that solution have a duty to disclose to the merchant that the various websites and reviews are all from a single source: their AI-driven-marketing department.
In recent years, payment processors have taken on ever more responsibility for the wrongdoings of the merchants they serve. In the pre-AI world, merchants rise and fall in volume as a function of their ability to market their services. Imagine, however, a merchant that harnesses AI to "tickle" the consumer in just the right way for them to part with their money quickly but fraudulently.
ISOs and processors are familiar with all manner of high-volume merchants that have questionable ethics. AI gives those merchants super-powers. The ISO may be called upon by their acquiring bank and possibly regulators, such as the Federal Trade Commission to police those merchants.
The marketing tools that merchants will have will perhaps be so powerful and so quickly deployed that processor underwriting departments do not have tools necessary to manage the risks. ISOs should perhaps look over the horizon into a processing landscape where AI-powered underwriting tools are necessary to nip fraud in the bud—at scale.
It's already hard to believe a lot of the spam and texts we receive. AI will enable bots to make sales calls and sound believable. This may put the actual sales rep in a position of having to compete with machines in sales calls. It's hard to tell whether the flood of bot pitches will make real, sometimes called "bio" salespeople more or less attractive to merchants.
Another inversion of reality is that merchants might prefer to deal with machines than people—finding the machines more believable.
I remain optimistic about our future provided we prepare for a reshuffling of the deck in terms of which skills are most valued in advancing a payments business. With laws and courts answering to a human standard, there is room for optimism that humans will remain an important part of the sale of payment services. 
In publishing The Green Sheet, neither the author nor the publisher are engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. For further information on this article, please contact Adam Atlas, Attorney at Law email: atlas@adamatlas.com, Tel. 514-842-0886.
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