In the new PYMNTS eBook, “The Implications of Uncertainty,” Thredd Chief Administrative Officer Oliver Dean explores how data analytics and AI have transformed the card payments industry.
Continued uncertainty in the market and our geopolitical landscape is one of the few things that we can be certain of. How businesses navigate turbulence and start to use it as a competitive advantage often comes down to effective interrogation and utilization of data.
The advent of data, data analytics and artificial intelligence (AI) has significantly transformed the card payments industry, reshaping how transactions are processed, enhancing security and improving customer experience. This transformation is not just evolutionary; it’s revolutionary, as it leverages vast amounts of data to drive insights and decision-making, fundamentally changing the landscape of financial transactions.
One of the most significant impacts of data analytics and AI on card payments is the advancement in fraud detection and security measures.
Traditional fraud detection systems were rule-based and often reactive rather than proactive. Today, machine learning algorithms analyze transaction data in real time, identifying patterns and anomalies that indicate fraudulent activity. These systems learn from historical transaction data, becoming increasingly effective over time. By analyzing variables such as transaction size, location and frequency, AI-driven systems can identify suspicious activities with high accuracy, reducing false positives and minimizing fraud losses. Thredd recently launched its AI-powered Fraud Transaction Monitoring solution, which assesses and halts suspicious transactions in under 20ms and provides real-time notifications to the issuer. This stateof-the-art fraud monitoring solution has significantly decreased our clients’ fraud losses.
Data analytics allows card issuers and merchants to understand their customers’ spending habits better, enabling them to offer personalized products, services, and rewards. By analyzing transaction data, companies can identify customer preferences and behaviors, tailoring offers and communications to meet individual needs. This personalization enhances customer satisfaction and loyalty, as consumers receive offers that are relevant and valuable to them. Moreover, AI can automate customer service interactions, providing quick and accurate responses to inquiries and issues, further improving the customer experience.
AI and data analytics also streamline 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 the companies by lowering overheads but also improves the customer experience with faster service. Additionally, predictive analytics can help in anticipating and managing demand, ensuring that systems are scalable and can handle peak transaction volumes without disruption.
At Thredd, we’ve deployed AI across our internal and external platforms, allowing our clients’ developers to query our developer documentation more quickly and our associates to have access to AI-compiled meeting notes and summaries.
Regulatory compliance is a significant concern for the card payments industry, with stringent requirements around 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 the monitoring and reporting processes, making it easier for companies to comply with regulations while reducing the risk of costly fines and reputational damage.
Finally, the use of data and AI is enabling the development of new and innovative payment solutions.
From contactless payments to biometric verification methods such as fingerprint and facial recognition, these technologies are making transactions faster, easier and more secure. AIdriven 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 the integration of data are vast and in an age of uncertainty give payments businesses a solid foundation on which to flourish.
The continued integration of data analytics and AI in the card industry is transforming every aspect of how transactions are processed, secured and experienced. These technologies are not only improving operational efficiencies and customer experiences but also driving 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 seamless, secure and customer-centric.
