Artificial Intelligence Driving Digital Payments
Sunil Rongala, Senior Vice President – Strategy, Innovation & Analytics, Worldline
As far as the payments space (payments for goods and services) is concerned, AI has primarily been deployed in transactions monitoring engines (for fraud), automating workflows and processes, chatbots for customer service and to some extent KYC processes. There have been instances of AI deployment in stores such as Amazon Go but that has been in a small(ish) scale and not necessarily deployed across the board, but it is potential forerunner of things to come.
However, the real leap in the application of AI in the field of payments will come when it starts making fully autonomous choices on behalf of buyers of goods and services. It is already happening in a small way with IOT devices.
A recent white paper by Worldline (The IOT Payment Revolution: The Future of Autonomous and Invisible Transactions) highlights how this is set to grow in a large way in the coming years across multiple years. The paper shows how the confluence of constantly improving AI, independent rise in people preferring to pay digitally and the increase of IOT enabled devices is leading to the rise of autonomous payments. Why IOT devices? They are going to be what really push consumer digital payments onto a different plane. Why AI? AI is going to be making decisions on behalf of the buyer albeit in a safe and secure manner.
In the paper, AI along with blockchain are going to be the key technology enablers for IOT payments. They write: “IoT devices collect large amounts of data that can fuel AI machine learning algorithms and neural network systems to predict consumer behavior. Extensive training on user behavior and the transactional context is needed to effectively implement the capability to execute truly autonomous payments on behalf of and with the full confidence of a human user.” To be clear, AI is not some dystopian technology running amok; it is there to assist buyers.
According to the authors, there are 4 levels to fully autonomous payments.
1. Level 0 (Informational) : The device has permission to access a user’s bank account. The outcome of such a transaction is only to provide information regarding the permissible data available in this bank account around payments. Example: voice assistant.
2. Level 1 (Permissioned) : The device must request the explicit consent of the user before triggering a payment. Payment permission must be granted by authentication means (e.g., biometric, or non-biometric). Example: Tolls, connected appliances.
3. Level 2 (Conditional) : The device makes a payment automatically (without asking the explicit consent of the user) under pre-defined deterministic conditions set by the user to trigger the payment. Example: smart printer ordering ink
4. Level 3 (Fully Autonomous) : The device conducts a payment automatically using a combination of pre-defined deterministic conditions (as per Level 2) and, additionally, uses adaptive behaviors of the device depending on the context. Example: smart fridge ordering.
While there are obviously multiple conditions that should be met for autonomous transactions to happen such as frictionless payments as well as trust, security etc, it is clear that Artificial Intelligence is set to grow at a rapid pace changing the face of payments in a positive manner.