As a business owner, Artificial Intelligence, or AI, may seem intimidating, but understanding how it’s currently used in business as well as where it’s headed will help you learn how to effectively capitalize on this technology, and how those around you may already be using it.

Artificial Intelligence is a branch of computer science focused on building programs that can do tasks which would otherwise require human intelligence. AI as it’s used today does not refer to the super-intelligent robots depicted in science fiction, but instead it is used to make our lives easier and better. Many aspects of AI are already integrated into our societies, from improved business processes to convenient “smart” products.

The following sections explain some of the ways that AI is enhancing the payment industry.

Artificial Intelligence can be used to improve security for businesses and merchants in various ways, including protecting businesses from data breaches, flagging potentially fraudulent transactions in real time, and improving financial institutions’ lending decisions. Preventing security-related issues is crucial in this age of digital payments, but without the assistance of AI, implementing and maintaining strong security measures requires significant resources. The following sections list some of the ways that AI can do the heavy-lifting to improve security while reducing your workload.

• Real-time transaction monitoring: Machine Learning (ML) is a branch of AI that can analyze big data to identify suspicious activities and flag transactions that could be fraudulent. Data scientists train Machine Learning models to perform these types of tasks by feeding them historical transaction data and patterns commonly associated with payment fraud. Then when the model is fed real time payments data, it can recognize fraud as well as a human would, but at superhuman speed.
• Know Your Customer (KYC): Natural Language Processing (NLP) is a branch of Machine Learning that gives computers the ability to understand human language, as opposed to computer programs that can only understand code or programming languages. KYC requirements involve reviewing various identification and business documents, which can be a labor-intensive and error-prone manual process. NLP can speed up this task and reduce operational costs by extracting required data from lengthy documents, searching for banned keywords, scanning the merchant’s website for discrepancies with their provided documentation, and more.
• Underwriting: Machine Learning can be used to make more accurate lending decisions, and come to those decisions faster. ML models can analyze the key data points that are traditionally reviewed by humans to assess the risk of lending to a business. Manual processes are vulnerable to human error and tend to be much slower than automated processes, so automated lending decisions can enable financial service institutions to grant their clients approval in a matter of minutes, with greater certainty in their decisions.

With access to more information than ever, making data-driven decisions is essential for businesses to stay competitive. The Machine Learning and Natural Language Processing branches of AI can help with this by analyzing your business’s data across multiple sources and uncovering key statistics that clarify where improvements can be made. Using AI reporting on a regular basis can also reveal trends over time that may not be apparent from traditional analytical methods. In short, Machine Learning models can help identify ways to influence consumer behavior or fix undetected inefficiencies that are reducing your bottom line.

New technologies that have recently entered the market are being adopted at different rates for a variety of reasons, including regulatory environments and infrastructure required. Businesses that are able to incorporate evolving payment technologies will benefit from increased sales from customers who expect quick and convenient checkout experiences.

Smart devices offer cutting-edge payment methods such as Tap to Pay on iPhone and mobile wallet technology. Available on mobile devices, Tap to Pay on iPhone enables customers to make card-present payments by tapping their credit card on the merchant’s iPhone, eliminating the need for businesses to purchase and set up additional card-acceptance hardware. Learn more about Payanywhere's Tap-to-Pay on iPhone.

Mobile wallets are digital versions of wallets that allow consumers to store and use payment methods on a mobile device. Most mobile wallets allow users to make payments in-store and online, and some, such as Samsung Pay, support both Near Field Communication (NFC) for contactless payments and Magnetic Secure Transmission (MST) which enable payments at virtually any card payment terminal. As more businesses adopt NFC-enabled terminals, the usability of digital wallets significantly increases.

Text-to-pay is an emerging payment feature that leverages text messaging technology to facilitate financial transactions. With these solutions, customers can make purchases by sending a text message containing the required information to a specified phone number. In addition to standard retail purchases, text-to-pay is a great option for several use cases.

• Bill Payments: Paying recurring bills or invoices is extremely convenient when customers can pay by simply sending a text message.
• Donations: Non-profit organizations can use text-to-pay for fundraising purposes.
• Events: Text-to-pay can make buying tickets to events faster and more convenient.

There are multiple ways that text-to-pay technology can be implemented. Merchants can initiate a text message that links to a bill or an invoice’s payment details that customers can complete, as with Payanywhere's Invoicing options. Customers can also initiate a payment by sending a text message to a designated number with transaction details including the payment amount and any required authentication.

Buy Now, Pay Later (BNPL) is a payment model that allows consumers to make a purchase and pay for it through a series of installments. The service is often provided by third-party companies that partner with retailers, rather than by the retailers themselves. Analysts from eMarketer report that in 2023, US shoppers spent $16.6 billion dollars using BNPL plans during the holiday season alone, and that BNPL sales volume increased 14% year over year.

BNPL offers customers instant approval without the need for a credit approval process. Many BNPL plans offer interest-free periods during which customers can pay off their balance without incurring additional fees, although late fees may apply if a payment is missed or if any other terms of the agreement are broken.

Embedded payments, or the integration of payment functionalities directly into other software, seamlessly blend payment processes with the user experience. Customers can make payments within the context of the app they’re using without needing to navigate away to a separate payment system.

A cloud Point of Sale (POS) application is software that runs on cloud infrastructure that can also be thought of as a remote server. This makes the application accessible online, unlike traditional POS software which is typically installed on local terminals or servers. Cloud POS applications, like the North Semi-Integrated Cloud API, allow merchants to use POS software from anywhere with an internet connection, adding more flexibility to the payment experience.

Businesses can use cloud POS systems on various devices, such as computers, tablets, and smartphones. This makes it simple and easy for merchants with multiple locations to do business and access sales or inventory data on the go. It also means that these payment systems can easily scale up as businesses grow. Expanding to new locations and handling increased transaction volumes are easily managed, since cloud infrastructure settings can be adjusted or upgraded to meet a variety of needs.

Hosted payments refer to a payment processing model where the payment form is hosted on the payment processor’s secure servers rather than the merchant's servers. Hosted payments enhance security and can help merchants reduce the risk of data breaches by transferring the responsibility of handling sensitive payment information, such as credit card details, to the payment processor.

Additionally, integrating hosted payments is typically simpler than integrating a direct-to-processor payment solution. With solutions such as EPX Hosted Checkout, merchants can incorporate the hosted page or payment form into their website by using a URL or iFrame that the payment partner provides, reducing the technical complexities required to get up and running.

Subscription payments refer to a recurring billing model in which customers continuously make payments for access to a product or service. This is convenient for customers as they only have to complete the checkout process once, while also increasing repeat business for merchants. In an effort to retain customers long-term, subscription payment options such as Payanywhere Recurring Invoicing often include dunning management, which involves retrying failed payments multiple times and notifying customers about persistent payment issues. Some payment solutions such as North’s Recurring Billing API offer a variety of billing cycles to cater to different customer preferences, such as monthly versus annual billing.

Open Banking APIs allow financial institutions to securely share customer financial information with third-party providers, enabling new financial products to leverage customer data from various financial services, make cross border payments, and more.