The payments industry continues to be transformed and remade by the 21st century’s digital shift.
And as technical innovations like generative artificial intelligence (AI) continue to push money movement capabilities even further, players from Big Tech and the financial services sector alike are looking to build the next generation of payments products and infrastructure — one that is built for hyper-connected digital generations.
This, as Visa on Monday (Oct. 2) launched a new $100 million generative AI ventures initiative, aiming to invest in companies focused on developing generative AI technologies and applications that will shape the future of commerce and payments, as reported by PYMNTS.
This initiative builds upon Visa’s long-standing use of AI in payments and will be led by Visa Ventures.
Corporate venture funds are in many ways the new corporate R&D departments, and the 9-figure fund shows that Visa is going long on AI-for-payments.
“With generative AI’s potential to be one of the most transformative technologies of our time, we are excited to expand our focus to invest in some of the most innovative and disruptive venture-backed startups building across generative AI, commerce and payments,” David Rolf, head of Visa Ventures, said in a statement.
Much of the payments and FinTech sector’s growth has been built on a foundation of certain historical forms of AI, such as predictive forecasting and machine learning (ML), which have been integrated into money movement processes and programs for years.
But generative AI promises to accelerate the efficiencies already offered by predictive AI around things like authorizations, compliance and risk controls, fraud detection, streamlining international transactions, and by more generally enacting cost-effective and non-manual decisioning processes that are increasingly auditable and do not sacrifice security for convenience.
Instant and convenient payment options
That’s because many generative AI innovations within the payments space promise to significantly reduce friction in the money movement process, providing users with seamless and secure experiences.
Several emerging and digitally driven payment trends are well-positioned to capture these AI efficiencies, including digital wallets and mobile payments, contactless and biometric payments, and other next-generation value transfer and custody solutions. In doing so, they may lead a new era of instant and convenient payment options.
As Form3 CEO Michael Mueller told PYMNTS, “payments are still an exciting growth business, despite the fact that they’ve been around for so long.”
Coincidentally, Visa announced an investment in Form3 last month (Sept. 12). Their collaboration will leverage Visa’s AI and real-time risk scoring to help identify patterns and card-based transactions that, according to Mueller, “reveal the likelihood of a fraudulent payment.”
“For the first time, we’re able to use card-based fraud prevention technology in the real-time payments world,” he added.
That’s because whereas predictive AI analytics were only able to operate after the data was collected — rendering them somewhat helpful but static — generative AI tools don’t have the same constraints. They are able to use smart analytics that make sense of collected data while the payments are still flowing.
Modernizing payments infrastructure
As PYMNTS has reported, CFOs are often the ones responsible for spearheading the kind of enterprise modernizations that open the door to future innovations.
“Embracing digital transformation and upgrading systems is [important] for improving the speed and agility of outcomes and helping the business continue to move fast,” Hinge Health CFO James Budge told PYMNTS. “Finance departments, if they choose to be, can be at the leading edge when it comes to embracing these new systems, new opportunities, new ways of running processes and reexploring processes that may not have been efficient in the past.”
Legacy processes in finance, as with payments, can lead to errors and failures, but by embracing technology and prioritizing enhancements, companies can streamline their operations and improve efficiency.
“It’s both product’s role as well as the CFO’s role to draw awareness to the fact that many finance functions are underfunded and highlight how much power can be unlocked there through innovation,” Aanchal Kochhar, head of product at Capital One Trade Credit, told PYMNTS. “You can delight customers and capture more customers when underwriting is seamless, the credit process is seamless, and how money flows is seamless and with less error. There is a lot of growth potential.”