Not-so-spoiler alert: I am fully on the AI train. And the more I learn about it, the more I’m convinced using AI in payments — and other processes — is a good thing.
Recently, I sat down with Emanuel Darlea, an entrepreneur who dubs himself “the ChatGPT for clients,” to discuss how artificial intelligence is changing the financial landscape. In this post, I’ll share the insights I learned from my conversation with him, plus share the many reasons and benefits businesses like yours can gain from incorporating AI into their payment systems.
Table of Contents
- What Is AI in Payments?
- How AI Is Used in Payment Systems
- Benefits of AI in Payments
- Challenges of AI in Payments
- Brands Already Using AI in Payments
What Is AI in Payments?
Using AI in payments means you have a system in place that incorporates artificial intelligence to streamline and automate various parts of your payment processes.
Think invoice creation, fraud detection, and ordering — these processes can be easily automated and monitored for errors.
When I asked Darlea what his thoughts were on incorporating AI payments, he made a point to assure me that artificial intelligence isn’t going to take over the world —- or our wallets. Instead, as he explained, AI works within set parameters outlined by an AI programmer.
He said, “So AI, unlike what many believe, a programmer has to give it certain parameters within which it is able to operate. Some of the parameters are KYC.”
For those not well versed in acronyms, “KYC” stands for “know your customer,” and it’s a parameter programmers, particularly those within the financial industry, use to verify the identity of their customers.
Darlea continued to tell me, “So KYC, that's one parameter. Then, credit cards. Was it declared stolen or not? So, these are parameters that the AI will use in order to allow a transaction to be successful.”
AI-powered payment processors use algorithms and machine learning to speed up some parts of the transaction process, while focusing on accuracy and detecting fraudulent activity in other parts.
The most common technologies in AI for payments are:
- Natural language processing. NLPs understand and respond to written or spoken language.
- Machine learning. These are systems that can quickly crunch raw data and make sense of it.
- Generative AI. Generative AI can create text, images, or video based on user prompts.
- Predictive analytics. Systems created with predictive analytics can predict trends and spot patterns.
HubSpot Commerce & Payments Software
Powerful and easy-to-use commerce tools to help your business bill your customers and collect revenue.
- Payment Links
- Quotes
- Invoices
- And More
How AI Is Used in Payment Systems
How AI is used in payment systems can vary from business to business and industry to industry.
For example, small businesses may want to use AI to personalize the transaction experience, like suggesting new products to customers before checkout.
Other businesses, particularly those within the financial sector, use it for predicting the likelihood of bad debt or credit. One AI solution claims to catch up to 83% of bad debt, making it much easier for financial institutions to make risky loan decisions.
Let’s look at some use cases for AI in payment systems.
1. Fraud Detection
Since I’ve already mentioned using AI for fraud detection, let’s talk about it. Because AI can quickly parse through raw data and analyze it, businesses can quickly detect fraudulent activity. Knowing this, it makes sense why 94% of companies use AI for fraud detection.
AI tools can recognize patterns and trends, and if those patterns seem a bit wonky, the system will flag them for review. Then, a dedicated employee will review and investigate the error. Not only can this save your business from hackers or other nefarious activities, but it can also prevent issues for your customers — and they’ll love you for that one!
2. Personalize the User Experience
If you shop for groceries using an app, you may have noticed that your favorite store will ask you if you’ve forgotten anything before checking out. They might even suggest other products before you hit the “pay now” button.
This is AI at work.
Personally, I like that AI can be integrated into the payment system to personalize the user experience. It’s saved me from having to make multiple purchases for kitchen staples I forgot to put on my list, and I’ve even discovered new spices to add to my spice cabinet based on its suggestions.
AI learns user behavior and, using predictive analytics, can suggest products for users to try based on similar customer profiles and their interactions.
3. Better Customer Support
While it might seem like chatbots might not be the best use of AI in payments, customer support can use them to help provide answers to invoicing questions, shipment tracking, and other things, like payment verification.
Chatbots can help save your customer support team time, so they can assist other customers with more urgent matters. In fact, they can help grant access to services for nearly 82% of customers — talk about freeing up time and resources for your team.
4. Automated Payment Processing
Processing invoices can be a mundane task. While entering numbers is often monotonous, it’s also critical that you enter the correct information into your payment processing system. One click of the wrong button or number could lead to a costly mistake.
AI can help automate payment processing, like creating and entering invoices, to reduce error and improve accuracy.
5. Forecasting and Risk Management
Depending on the industry, AI can be a great tool to help identify risks, especially when it comes to processing loans and credit applications. AI helps to parse through historical data and analyze numbers to give creditors a better idea of if they should take on the risk of approving an applicant’s loan request.
Other industries can use AI’s forecasting capabilities to make predictions on their investments. This can help increase margins and reduce transaction costs and risks.
6. Voice-Activated Payments
Remember how I mentioned generative AI is a big part of AI in payments? Many companies use it for voice-activated payments.
AI-powered voiced recognition systems work by responding to customers’ voice commands and prompts. This can be incorporated into payment systems to make ordering, like in a fast food drive-thru, easier and more efficient.
7. Security Compliance.
For any business that accepts different types of payments, ensuring your payment system is secure is a top priority. Not only that, but you’ll also want to ensure that the credit card payments you accept are real payments from verified customers.
AI helps ensure your payments are secure and are operating within the limits of federal security regulations.
Benefits of AI in Payments
78% of chief financial officers say access to AI technology is very important. And as I was talking with Darlea, the benefits of AI in payments became clear. If you want to strive for accuracy, you need AI.
Here are three of the most important benefits of using AI in your payment processing and point of sales systems.
1. Streamlines Your Processes
One of the biggest benefits of AI, in general, is that it helps to streamline your processes and workflows. AI in payments is no different.
I like what Darlea said about AI: It’s not your competitor. It’s your best co-worker. And that co-worker’s best skill is looking at the past and present to offer the best solutions to streamline your workflows.
He put it like this, “It‘s like you’re talking to your elders who went through lived experiences. You‘re not going to go to any elderly person that you know. Instead, you’re going to go to the ones that you personally know, and you‘re going to ask them for advice. And they’re going to say, ‘I went through this, and I did this, this, this and that. And it worked for me.’ Okay, I‘m going to listen to you. You’re going to try it. It‘s going to work. So, you’re going to go with a trusted source. So this is kind of how I see AI helping me in my day-to-day job.”
Essentially, when you add AI to your payment processes to automate repetitive tasks, like ordering or invoicing, it’ll do exactly what Darlea said — it’ll look at past decisions to make better, smarter ones in the present with the current data, leaving your team to focus on more important tasks, like building relationships with customers.
2. Builds Trust
Darlea also told me that a benefit of using AI in payments is that it builds trust.
He said, “It‘s going to build a little bit of trust between the customer and the business. Why? Because as a business, I know that I’m not dealing with a scammer or a fraudster. And the customer knows that I, as a business, am not a scammer or a fraudster.”
According to Darlea, this automatically creates a trust which normally would take weeks or months to build. “AI will do it in a second,” Darlea says.
3. Protects You From Fraud
Speaking of fraudsters and scammers, fraud protection is both a benefit and a use case of AI in payment processing. Darlea, a victim of identity theft, is a big fan of incorporating it into payment processing as an added benefit.
He told me, “The type of protection in these kinds of AI payment processings is going to be helping me to make sure that my customers don't fall victim to such nonsense that I went through years ago before this was available.”
4. Improves Accuracy and Efficiency
Don’t get me wrong, those on your team who work with numbers day in and day out to balance your books and ensure invoices are accurate and paid are good at their jobs. Providing them with AI tools to streamline their work, though, can help cut down errors and improve their overall efficiency.
Afterall, we’re all human and a mistake here or there is bound to happen (that’s normal!). AI helps reduce that risk and improve the accuracy of your invoices, orders, and financial reports.
HubSpot Commerce & Payments Software
Powerful and easy-to-use commerce tools to help your business bill your customers and collect revenue.
- Payment Links
- Quotes
- Invoices
- And More
Challenges of AI in Payments
Although there are plenty of benefits to using AI in your business for payments and transactions, it also comes with quite a few challenges. I took the time to ask Darlea his opinions on these, mostly to see if the challenges outweigh the benefits.
I’m happy to report that he doesn’t think the challenges outweigh the benefits of AI in payments. But, given that there are a few challenges, here are a few you need to consider when searching for a new AI tool.
1. Connecting the Infrastructure
I’ve been writing about AI for quite some time now, and even though I understand how it works, it still baffles me that it takes quite a bit of infrastructure, like data storage, to make it work. You’ll need a storage warehouse to hold all of your raw data, and that can take up some space.
Adding an AI tool to your payments is much more than just signing up for a subscription. You’ll need someone tech savvy enough to weave your systems and data storage facilities together, so your AI tool can pull data from the appropriate places.
He told me, “There's much more than just connecting a website. You can have your solution with several databases or residing on different websites on different servers. Just out of the box, your payment processing is not going to communicate with all of them. You still need to know how to and where to fetch that data.”
Pro tip: Understanding how to connect your systems to your AI tool can be confusing, even with help from the customer support team. You may need to hire someone to do this for you.
2. Costs
Which brings me to the next challenge. Depending on the kind of AI you need for your business, it can get costly, especially if you need a software designer to connect the moving parts for you. On top of that, you’ll need to pay for data storage and for the subscription to whichever AI payment processor you choose to use.
Before choosing an AI-powered point-of-sale system, be sure to research the costs. You may find one works better for your business and budget than others.
3. Legal Compliance
Another challenge for using AI in payments is legal compliance. Darlea brought this up and mentioned that you need to ensure your AI tools are GDPR compliant for the European market.
He said, “You need to make sure wherever your customers are coming from, you're not going to be able to hold on to that data. So you want to make sure that your payment processor is compliant based on wherever it’s coming from.”
Pro tip: You’ll need to take the time to ensure your payment processing systems are compliant with regulatory standards. If not, you risk hefty fines.
Brands Already Using AI in Payments
Now that we know how companies can use AI in their payments, let’s take a look at a few brands that are already on board with it.
Predictely
Darlea’s company, Predictely, uses AI in the payment processor to identify and create customer accounts using indicators. Once those accounts have been created, if the AI tools detect an inactive account, it will automatically delete it or give him a notification so he can personally reach out to his clients.
I like this use of AI. Not only does it automate the creation of customer accounts after payment is received, but it also helps improve the customer experience. By knowing which customers to reach out to, he can effectively solve and prevent issues for his clients.
IBM
IBM uses AI in their payment processes in a different way than Darlea’s use of AI. IBM uses AI to identify errors in their invoices. Their AI tool searches invoices for discrepancies, like missing fields or incorrect formatting, and can fix those issues for easier processing.
I think this is a smart use of AI because it automates an otherwise mundane task, while improving efficiency.
Taco Bell
Taco Bell is a great example of using generative AI in payments. At some locations, Taco Bell uses voice-activated AI in the drive-thru lines to place customers' orders through voice commands. This can streamline the ordering process, especially if their team members are busy with other customers.
I have not personally used their voice-activated AI at my local Taco Bell. But, I can appreciate how it can speed up the ordering process and make their food service more efficient.
Walmart
Walmart is no stranger to incorporating AI into processes. Walmart customers can use Walmart Voice Order to quickly order their groceries. Using the Walmart app and its AI-capabilities, customers can ask it to put items in their cart for purchase.
I also like that Walmart has also adopted AI-powered chatbots. These chatbots help customers quickly identify order status or begin the returns process.
The Future of Payments
As I learned by chatting with Darlea, AI is here to stay. If we thought our payment systems were good before, they only become better with AI.
From helping your team members create more accurate invoices to helping your customers find new products to verifying payments, AI can improve nearly every aspect of the payment process, while ensuring you’re reaching your profit margins and revenue goals.
HubSpot Commerce & Payments Software
Powerful and easy-to-use commerce tools to help your business bill your customers and collect revenue.
- Payment Links
- Quotes
- Invoices
- And More
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