Processors Are Starting to Adopt AI, But Consumers May Not Be Entirely Onboard

The explosive potential that lies in recent advances in artificial intelligence is beginning to be felt in the payments business as banks and fintechs search for ways to wring intelligible trends and operational improvements out of enormous masses of data.

The nascent trend toward AI in payments was underscored by a pair of developments that emerged early Tuesday, though research results released at the same time indicate consumers may not be entirely comfortable with the trend.

London-based payments-technology provider Checkout.com launched Intelligent Acceptance, an AI technology trained on what the company calls “billions of data points.” In beta testing, the system has increased acceptance rates by up to 9.5 percentage points for more than 30 merchants and processors, including Klarna and Ant Group, the company says.

Meanwhile, Sionic Mobile Corp., an Atlanta-based payments provider specializing in real-time account-to-account payments, says it has integrated generative AI technology from Google Cloud in an effort to maximize onboarding and dispute resolution for both payers and payees.

Indeed, the company also expects the Google AI technology will take the burden of dispute resolution off the shoulders of banks entirely, a contrast with credit card transactions, where payers wrangle directly with card issuers, Sionic says. “By integrating Google Cloud’s gen AI, we can offer our customers a superior experience,” says Matt Watson, Sionic’s chief technology officer, in a statement.

Checkout.com said its own venture in AI allows merchants to control the part of the payments process they want to focus on, including acceptance rates and transaction costs. The system “learns” from its interactions with issuers, networks, and regulators to make “continuous live adjustments” to improve payments flow and economics, the company says.

The platform can also automatically format or amend data that go along with transactions to comply with specifications set out by networks and issuers, the company says. Of particular interest to merchants, the system can route to networks offering “the lowest fees,” Checkout.com says, “in markets where multiple debit, local, or global payment networks are available—such as the [United States].”

The company also claims the technology can reduce false declines for merchants, in other words, payments that should have been accepted but were refused on the basis of incorrect data about customer balances. False declines cost sellers some $50.7 billion in the United Kingdom in 2022, Checkout.com says, based on research the company conducted with Oxford Economics. In such cases, many customers simply walk away, the company says.

But while processors and merchants may be ready to at least try out AI, some 14% of consumers around the world are using so-called AI-driven payments technology, while 86% have “reservations” about it, according to new research from payments provider Paysafe Ltd. and Sapio Research, which surveyed 14,500 consumers in 14 countries, including the United States.

Indeed, among those with reservations, some 17% “are not comfortable using AI-driven payments technology at all,” the researchers say. At least some of the consumers knew when they were using AI technology, such as in checkouts, smart wallets, and payments chatbots, the research indicated.

As a result, payments providers and sellers have some work to do, the research indicates. “Payment service providers and merchants will need to educate users about the benefits of AI-driven payments, such as smoother experiences, convenience and security, in order to break down those barriers,” says Rob Gatto, chief revenue officer at Paysafe, in a statement.