How is Technology Altering the Payments Landscape

CIO Review APAC | Tuesday, November 30, 2021

 Blockchain provides near-instant and transparent payments in the competitive cross-border payments market, removing complex and opaque fee structures.

FREMONT, CA:  In today's global economy, payments are the lifeblood. Issuers, networks, payment processors, and merchant acquirers are investing heavily in retooling their payment systems, using multiple technological developments to fit customer preferences and industry-specific business objectives better. In this article, have a look at two emerging technologies that are now—or soon will be—sparking a surge of innovation, as well as recent developments in payments technology modernization.

Consider how some of these technologies are altering the payments landscape and the structure of traditional platform architectures.

Blockchain: For some payment types, distributed ledger technology enables more cost-effective, secure, and completely traceable money transfer in most commercial use cases. Blockchain provides near-instant and transparent payments in the competitive cross-border payments market, removing complex and opaque fee structures.

One Kenyan startup uses distributed ledger settlement to allow consumers to send and receive low-cost, near-instant payments without the need for a bank account or even a wallet. Because of blockchain's distributed, consensus-based, real-time transaction verification, it is exceedingly challenging to defraud systems that use it; it also allows for higher transaction-per-second throughput and faster settlement than traditional card-based systems. To be sure, there are still technological and legislative roadblocks to overcome before broad blockchain use, but the potential is undeniable.

Deep learning and artificial intelligence (AI): With the democratization of data and neural networks, card issuers and payment providers must use AI and deep learning to institutionalize next-generation fraud monitoring and anti-money laundering and deliver value through higher approval rates, fewer declined transactions, and proactive credit limit management. One multinational financial services corporation, for example, employed AI/machine learning models to look for fraud indications in over 500 transaction variables in real-time, preventing 25 billion dollars in fraud in 2019. AI is also opening new income and monetization opportunities for merchants and advertisers, such as on-demand and real-time analytics, deep data monetization, and effective pricing and promotion support.

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