75% of Acquiring Banks Now Use Artificial Intelligence to Detect Card Transaction Fraud

Acquiring banks are under intense pressure to process transactions efficiently while detecting and preventing fraud attempts. That’s a growing challenge due to recent increases in both payments volume and fraud attacks. To manage these trends, many acquirers are using artificial intelligence (AI).

A new report, AI In Focus, a PYMNTS and Brighterion collaboration based on a survey of 104 executives at acquiring banks, found that 37% of acquirers say payments volume increased in 2021, and 93% of acquirers say their ratio of fraudulent transactions as a share of total transactions increased in the last 12 months.

Get the report: Waging Digital Warfare Against Payments Fraud

Acquirers have already widely adopted AI and related technologies to help them safely manage their businesses. In fact, 75% of acquirers use AI to detect card transaction fraud. Some evidence suggests AI can improve payment volume as well. Acquirers that use AI are 2.6 times more likely than those who do not to say their payment volumes have increased in the last 12 months.

These organizations view AI as an important tool to fight fraud and improve revenues. That’s key because 88% of the acquirers that use AI say reducing fraudulent transactions is a “very” or “extremely” important factor for maintaining profitability in the next year, and 53% say reducing the number of fraudulent or unprofitable merchants on their platform is an important factor for the same reason.

Acquirers are also aware that making the right investments in technology, including AI investments to bolster fraud detection, can be a differentiating factor to merchant clients in a competitive market. A large share of acquirers that use AI systems, 83%, say acquiring new merchants is a “very” or “extremely” important factor for maintaining profitability in the next year.