How 104 Acquiring Banks Are Using AI to Beat Fraud, Boot Unprofitable Merchant Accounts

Acquiring banks face a profitability challenge: Just 53% of the merchants they have on their platforms are turning a profit. The rest of their merchant accounts often wind up losing revenues to fraud, low transaction volumes and credit losses, while others just close out before they have the chance to transact enough to turn a profit.

Artificial intelligence (AI) has emerged as one of acquiring banks’ most essential tools in the fight to curb profitability challenges, but are acquiring banks making the most of it?

AI In Focus: Gaining Ground On Merchant Monitoring, a collaboration between PYMNTS and Brighterion, a Mastercard company, provides an overview of how AI factors into acquiring banks’ merchant monitoring strategies. We surveyed 104 executives at acquiring banks across the United States to learn about the concrete ways in which AI systems have enhanced this aspect of their business and their plans for expanding AI usage in the future.

Key findings from our research include:

Sixty-nine percent of all acquirers use AI to monitor merchants on their platforms. These merchants say that using AI has yielded several operational improvements, with the foremost among them being the ability to stop fraudulent transactions before they occur.

Acquirers using AI are more than twice as likely to report that transaction monitoring is one of their key competitive differentiators. They are also far more confident in the range of services they provide to the merchants on their platforms. 

Eighty-nine percent of acquirers using AI systems to monitor merchants outsource those systems to third-party providers. Their choice in provider is, therefore, one of the most important they can make in designing and implementing a successful merchant monitoring strategy.

These findings outline just a few of the key market trends uncovered during our extensive research. AI In Focus: Gaining Ground On Merchant Monitoring delves into the details of how acquirers use AI systems to enhance their operational efficiencies and boost their bottom lines.

To learn more about how AI can help acquirers’ broader merchant monitoring strategies, download the report.