As the explosion in the number of the digital payments through debit cards, credit cards, e-wallets, and mobile wallets all are used to process the multi-billion dollars transactions; it also brings unavoidable risk that a number of digital-payment fraud will also grow. However, with its simplest and ubiquity nature, Artificial Intelligence powers digital payments by enabling consumers to more easily purchase goods and services through digital assistants or recommendation engines that run on Machine Learning.
According to the global merchants that are anticipated to process seven hundred and twenty-six billion digital payments will be done by 2020. On the other side, criminals are not lingering to spot an opportunity. Currently, large manual anti-fraud and know-your-customer processes will not be enough to handle the number of digital payments expected in the coming years. If the protections are not up to snuff, the criminals will step in to exploit that situation. That’s why financial service is one of the areas showing interest in the development of AI. Albeit, rapidly mounting number of transactions means AI developers have large growing bodies of data on which to train their algorithms. Traditional rule-based and largely manual fraud detection systems strive to identify criminal activity by monitoring an array of variables like location, the sort of merchant and the amount being invested. But the problem with this existing model is that it is much more rigid in handling increased volume and complexity. Just 1.49 percent of all global transactions are deceitful, but in today’s highly digital world, many purchases do not fit into a rigid rule-based model of fraud detection. So here, AI can make the payment processing industry more intelligent, better able to lessen risk, more capable of providing tailored services and absolutely, better equipped to prevent fraud.
AI also can trim down much more a trader time and perform things with taking less time. Utilizing AI in a financial institution to spot fraud not benefits only from able to process transactions in real time, but also from the ability to identify the anomalies to effectively differentiate fraudulent transactions from honest ones. So, turning towards AI for many purposes, the financial industry needs to exercise high-level of due diligence. Because a poorly designed AI could inaccurately categorize customers as high risk, as a result denying them access to a range of financial services.