AI-Enabled Payments Enhance Customer Options Report

44% of Consumers Interested in AI-Enhanced Shopping Experiences

November 2023

As technology advances and reaches the payment industry, the introduction of artificial intelligence (AI) into payments is the next step in the industry’s evolution and is affecting how consumers pay for goods and services. AI allows businesses to streamline payments and combat fraud, in addition to enhancing the payment experience.

Consumers’ familiarity with AI is present in all generational groups, with younger consumers being more familiar with it than older ones.
Banking and shopping habits are underpinned by the goals and levels of comfort consumers have with AI.
Younger generational groups show strong hesitancy about credit, but AI could aide in breaking this mold.


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    The market is going through a payments revolution as artificial intelligence (AI) transforms how consumers pay for goods and services. Previous revolutionary changes in the industry, such as the introduction of credit cards, electronic transfers, online payments, mobile payments and FinTechs, laid the groundwork for the current revolution facilitated by AI.1 AI-enabled payments are found across markets and industries and allow consumers to have a better payment experience. AI enables businesses to streamline payments and combat fraud, which can reduce payment friction for consumers, among other benefits.

    As markets continue incorporating AI into their payment processes, companies embracing this technology directly shape the experience of their customers, which could create a virtuous cycle and increase consumer demand for AI-enabled payments. Consumers demand convenience — and this new revolution, in large part, caters to them.

    33%

    of consumers say AI technologies are already
    highly intertwined in their personal activities.

    Research shows that 46% of men and 33% of women are very or extremely familiar with the term “AI,” and roughly 33% of both, on average, say AI technology is very or extremely intertwined with their personal activities. Familiarity with AI also follows generational trends related to adopting new technologies: Younger generations are more open and familiar with it than older generations. A strong correlation also exists between income level and familiarity with AI.

    47%

    of consumers annually earning more than
    $100,000 are very or extremely familiar with AI.

    These are just some of the findings detailed in “AI-Enabled Payments Enhance Customer Options,” a PYMNTS Intelligence and ACI Worldwide collaboration. This report is based on three census-balanced consumer surveys conducted in March, August and September that explored how consumers use credit and their familiarity with and interest in AI technologies. This edition examines the evolving preferences and expectations of consumers with AI-enabled payments.

    Key Findings

    Consumers are increasingly familiar with AI and show considerable interest in AI-enabled experiences.

    As with most technology-driven trends, younger consumers are receptive and knowledgeable about AI in shopping and banking experiences. Data shows that 65% of Generation Z consider themselves very or extremely familiar with the term “AI.” Forty-six percent report that AI technologies are very or extremely prominent in their daily personal activities. In addition, we find that 60% of Gen Z consumers are interested in AI-enabled shopping, and 53% are interested in AI-enabled banking services. Millennials are less familiar with AI: 51% of millennials and 50% of bridge millennials report being very or extremely familiar with AI, but these generations see AI’s influence in their daily lives at similar rates as members of Gen Z. Generation X stands out in this respect. This group shows below-average familiarity with AI, with just 37% being very or extremely familiar with the term.

    Consumers might be more familiar with AI than they realize because most engage in AI-related activities weekly: 84% search online, 52% use a navigation app or device and 52% receive product recommendations online.

    Consumer subgroups have specific goals when choosing payment options and would be open to AI-enabled experiences that allow companies to respond to their needs.

    Generational groups have different goals and levels of comfort related to integrating AI technologies into shopping and banking experiences. There is interest in AI-enabled shopping and banking services, with roughly 4 in 10 consumers, on average, expressing interest. A breakdown of this shows that 60% of Gen Z and 54% of both millennials and bridge millennials are interested in AI-enabled shopping experiences. These rates are significantly higher than the average. Forty-four percent of Gen X and 30% of baby boomers and seniors express interest in AI. AI-enabled banking also follows this generational trend, with 53% of Gen Z, 49% of millennials and 51% of bridge millennials being interested. Just 28% of baby boomers and seniors say the same.

    Younger consumers are hesitant to tap credit, and AI could be a tool to change this trend.

    The hesitancy of younger generational groups about credit can be attributable to many things, but AI could be a game-changer in encouraging them to be more amenable to it. The simple fact is that younger consumers have fewer credit cards: Just 12% of Gen Z report having three or more credit cards, but 41% of baby boomers and seniors say the same, and 34% of Gen Z have no credit cards. Younger consumers are concerned about the current economic conditions that have made borrowing costs an impediment and high interest rates the norm. For this reason, younger consumers see non-credit alternatives as answers to their concerns about interest rates, fees and overspending. Data shows that Gen Z, for example, is more focused than other generational groups on managing their spending when using credit products, at 54%. In comparison, just 38% of baby boomers and seniors say the same. AI could help these younger consumers identify the best choice of payment to help them accomplish their goals, even if those are payment options this group is hesitant about.

    Conclusion

    As different market segments make inroads in incorporating AI into their payment processes, companies that embrace this new technology are impacting the experience of their customers, which drives consumers’ interest in the use of AI when making payments. PYMNTS Intelligence’s research shows that consumers are relatively familiar with AI and show interest in experiences with AI-enabled services, with younger generations being more keen and knowledgeable about this technology. All generational groups generally welcome AI-enabled shopping and banking experiences, with younger consumers more open to adding AI to these services. Consumer subgroups have distinct goals and preferences around using AI in their banking and shopping experiences, and service providers must tailor their features to appeal effectively to a wide range of consumers.

    Methodology

    AI-Enabled Payments Enhance Customer Options,” a PYMNTS Intelligence and ACI Worldwide collaboration, explores the evolving preferences and expectations that consumers have about AI-enabled payments. The study draws on data from multiple census-balanced consumer surveys: a survey of 3,396 U.S. consumers conducted between March 16 and March 21 about their experiences related to using credit; a survey of 2,338 U.S. consumers fielded between Aug. 2 and Aug. 10 about their views on the economy and artificial intelligence; and a survey of 3,302 U.S. consumers fielded between Sept. 20 and Sept. 26 about their use of credit for summer spending.


    1. [Ben-Ami, R. From Traditional to Cutting-Edge: How AI Is Shaping the Payments Landscape. 2023. https://justt.ai/blog/tech/how-ai-is-shaping-payments/. Accessed November 2023.]

    About

    ACI Worldwide is a global leader in mission-critical, real-time payments software. Our proven, secure and scalable software solutions enable leading corporations, FinTechs and financial disruptors to process and manage digital payments, power omnicommerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with a local presence to drive the real-time digital transformation of payments and commerce.

    Ingo

    PYMNTS Intelligence is a leading global data and analytics platform that uses proprietary data and methods to provide actionable insights on what’s now and what’s next in payments, commerce and the digital economy. Its team of data scientists include leading economists, econometricians, survey experts, financial analysts and marketing scientists with deep experience in the application of data to the issues that define the future of the digital transformation of the global economy. This multi-lingual team has conducted original data collection and analysis in more than three dozen global markets for some of the world’s leading publicly traded and privately held firms.
    The PYMNTS Intelligence Team That Produced This Report:

    Scott Murray: SVP and Head of Analytics
    Alexandra Lange, PhD: Senior Analyst
    Harold Maldonado: Senior Writer


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