Using AI And Machine Learning To Make Payments Faster, Safer

What do track and field stars, NASCAR drivers and millions of businesses owners around the United States have in common? They all have an appreciation for speed.

While more speed may mean more endorsement money for athletes, it means faster settlements and more efficient business for commercial banking customers.

With a growth in demand, banks and FinTechs are working to give business owners the speed they need. Faster payments recently made their American debut, with The Clearing House (TCH) instituting the inaugural transaction on the first new payments and clearing system in the U.S. in more than four decades.

In a recent interview with PYMNTS, Chris Ward, executive vice president and head of product management for PNC Financial Services Group — one of the first banks to offer real-time payments to personal and business banking customers alike — said he believes the technology could be a game-changer in the U.S. PNC recently rolled out real-time payments to customers via TCH’s new Real-Time Payments (RTP) network and the Finastra Fusion Payments payments services hub.

“Real-time payments enables PNC to bring a new, leading-edge solution to market as the economy becomes increasingly digital,” Ward said. “The ability to make an immediate payment at any time, on any day of the week [and] with a real-time confirmation of the payment — [that] significantly transforms the way businesses and consumers make payments in the United States.”

While faster payments are sometimes perceived as riskier than their older, slower predecessors, Ward noted that they can actually be safer, if paired with the right tools and technology.

Getting faster…

Just as a track star chases faster, better run times, business owners want things — like their payments — to move faster, too, Ward noted.

Real-time payments hold an even larger potential impact for businesses. Although not yet available, the technology will soon allow businesses to send requests for payment to individuals or parties that owe them money.

For businesses ranging from local landscaping providers to globe-spanning shipping companies, these requests will function as a new kind of invoice, making settlement a one-click process and thereby enabling merchants to obtain their payment money faster.

The new requests will also allow customers to only repay a portion of the invoice if need be, meaning it can be modified based on discounts, refunds for damaged goods or other circumstances. The entire settlement process would see requests, changes to the due amount and payments all recorded sequentially, making it easier than ever for businesses to report and track payments easier.

Put it all together, and the end result is a payments tool that can be of use to any business, large or small, Ward said.

“Invoices are a great use case, and I think you can take any traditional B2B payments use case and it would work well,” he noted. “Even a local repairman that would be sending an invoice and waiting for a check — [he] can send a request for payment to a customer and have [his] money much more quickly.” 

…and getting safer

But, while going faster may sound great, those NASCAR drivers will say that with increased speed comes increased risks.

On the asphalt oval, drivers must deal with reduced reaction time when getting to top speed, much in the same way that bank tellers and employees now need to make decisions in record time regarding which transfer requests are legitimate and which are fraudulent. After all, when money is moving faster than ever, decision making needs to be just as speedy.

But, for better or worse, human beings often just can’t keep up with payments in the fast lane. That’s why PNC uses a combination of human security experts and authentication technology — enabled by artificial intelligence (AI) and machine learning — to protect funds and data against hackers.

“We have a combination of things that the bank is doing to help safeguard these new payment types,” Ward said. “We have limits to the dollar amounts that people can transfer, [and] we’re doing fraud monitoring at individual banks and across the whole faster payments network, so there’s a real combination of different security strategies. We have multiple layers of technology and of fraud detection put into our network.”

He also noted that the nature of faster payments — which require approval from both sender and receiver to be completed — means if one of the parties has suspicions about the legitimacy of a charge or transaction, it can deny it. This, in turn, cuts down on the number of fraud incidents, Ward explained.

Security is important, he added, because faster payments appear to be popular among businesses and consumers alike — and that means they’re likely here to stay.

“I think as the economy continues to move toward a digital direction, we’re going to see [it] go from a batch payments world to a real-time payments world,” Ward said. “I think real-time payments provides an awesome capability [for] banks to create new financial services and products for their customers, and we’re going to see more of [those] in the future.”

When it comes to protecting payments, it seems faster may not mean riskier, after all.

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    The PYMNTS Digital Banking Tracker™ brings you the latest news, research and expert commentary from the FinTech and consumer banking space, along with the rankings of more than 200 companies serving or powering the digital banking sector.