In the new PYMNTS eBook, “The implications of uncertainty“, Thredd Administrative director Olivier Doyen explores how data analytics and AI have transformed the card payments industry.
The continued uncertainty in the market and in our geopolitical landscape is one of the few things we can be certain of. How businesses navigate turbulence and begin to use it as a competitive advantage often comes down to effective interrogation and use of data.
The advent of data, data analytics and artificial intelligence (AI) has significantly transformed the card payments industry, reshaping the way transactions are processed, strengthening security and improving the customer experience. This transformation is not only evolutionary; it is revolutionary because it leverages large amounts of data to generate insights and make decisions, fundamentally changing the landscape of financial transactions.
Improved fraud detection and security
One of the most significant impacts of data analytics and AI on card payments is the advancement of fraud detection and security measures.
Traditional fraud detection systems were rules-based and often reactive rather than proactive. Today, machine learning algorithms analyze transaction data in real time, identifying patterns and anomalies indicative of fraudulent activity. These systems learn from historical transaction data and become more efficient over time. By analyzing variables such as transaction size, location, and frequency, AI-powered systems can identify suspicious activity with high accuracy, reducing false positives and minimizing fraud-related losses. Thredd recently launched its AI-powered fraudulent transaction monitoring solution, which assesses and stops suspicious transactions in less than 20ms and provides real-time notifications to the issuer. This industry-leading fraud monitoring solution has significantly reduced our clients’ fraud losses.
Personalized customer experiences
Data analytics allows card issuers and merchants to better understand their customers’ spending habits, enabling them to offer personalized products, services and rewards. By analyzing transaction data, businesses can identify customer preferences and behaviors, and tailor offers and communications to meet individual needs. This personalization improves customer satisfaction and loyalty because consumers receive offers that are relevant and interesting to them. Additionally, AI can automate customer service interactions, providing quick and accurate responses to requests and issues, further improving the customer experience.
Operational efficiency
AI and data analytics are also streamlining operations in the card payments industry. AI algorithms can automate the approval process for transactions and credit applications, reducing processing times and operational costs. This efficiency not only benefits businesses by reducing overhead costs, but also improves the customer experience with faster service. Additionally, predictive analytics can help anticipate and manage demand, ensuring systems are scalable and can handle peak transaction volumes without disruption.
At Thredd, we’ve deployed AI across our internal and external platforms, enabling our customers’ developers to more quickly query our developer documentation and allowing our associates to access meeting notes and summaries compiled by the AI.
Risk management and compliance
Regulatory compliance is a major concern for the card payments industry, with strict requirements for anti-money laundering (AML) and know-your-customer (KYC) protocols. Data analytics and AI play a crucial role in ensuring compliance by analyzing transaction patterns to detect potential regulatory violations. These technologies can automate monitoring and reporting processes, making it easier for businesses to comply with regulations while reducing the risk of costly fines and reputational damage.
Innovative payment solutions
Finally, the use of data and AI enables the development of new and innovative payment solutions.
From contactless payments to biometric verification methods such as fingerprint and facial recognition, these technologies make transactions faster, easier and more secure. AI-driven chatbots and virtual assistants can guide customers through the payment process, while blockchain technology offers new ways to secure and streamline transactions.
In conclusion, the opportunities for data integration are vast and, in a time of uncertainty, provide payments businesses with a solid foundation on which to thrive.
The continued integration of data analytics and AI in the cards industry is transforming every aspect of how transactions are processed, secured and experienced. These technologies not only improve operational efficiency and customer experience, but also drive innovation, enabling the development of new payment methods and business models. As these technologies continue to evolve, they promise to further revolutionize the card payments industry, making transactions more transparent, more secure and more customer-centric.
