The Surge of AI and Digital Innovation in Real-Time Payments
August 14, 2024

Worldwide real-time payments are estimated to reach 575 billion by 2028, according to global real-time transactions. This is equivalent to more than 27% of the total electronic payments worldwide at a 17% annual growth rate.

With growing consumer expectations for speed, convenience, and security, Artificial Intelligence and digital innovation will change how banks, FinTech’s, and other entrants process transactions—ushering in a new era of efficiency in payments.

The efficiencies can be understood by knowing the role AI will play in fraud detection and prevention, enhancing the user experience, and the role of innovation in scaling real-time payments.

AI-Powered Fraud Detection and Prevention

Security is among the areas where AI can play one of the most important roles in real-time payments. When transaction speed increases, so does the potential for fraudulent activities. But AI-driven algorithms are uniquely positioned to fight this. In fact, such algorithms analyze huge data flows in real-time, looking for outliers in the data; if a potentially fraudulent transaction is identified, it then flags such a transaction without delay, thus providing a level of security not matched by other traditional methods.

Machine learning models learn from previous transaction data and understand normal transactions for a user. For such behavior— initiating a payment from an atypical location or atypical time—AI systems will automatically trigger an alert or even block the transaction until further verification is possible by taking such measures. With the ability to process and analyze information at superhuman speed, these are critical in landscapes where milliseconds differentiate between a safe transaction and a security breach.

Improved Experience and Personalization

The chances are that AI is going to change the game regarding user experience for real-time payments, too. Financial institutions have already started to leverage AI to provide a personalized payment experience for a single user.

Additionally, a growing number of chatbots and AI-driven virtual assistants provide customer service. Customer service uses them as a tool for self-management of inquiries on subjects such as payments and issue resolutions. They guide the user through the transaction and learn from each interaction in real-time to improve performance. The result is a more seamless, intuitive user experience, which is increasingly becoming a differentiator in the competitive financial services market.

The Role of Digital Innovation in Scaling RTP

Other digital innovations that have become central to efforts to accelerate the adoption and scaling of RTPs include cloud computing. This has enabled FIs to process the huge volumes of transactions that RTP systems generate without any loss of speed or security. Cloud infrastructure can be used by a bank or a payment provider to scale an organization effectively to easily handle an increase in customers.

Another digital innovation making rounds in the RTP space is blockchain technology. Blockchain can facilitate faster, more secure payments across borders by providing a decentralized and absolutely transparent ledger for transactions, reducing the time and cost associated with traditional cross-border payment methods.

The Future of Real-Time Payments

The future of real-time payments looks bright with AI and digital innovation. We can also see more improvements in security as AI models become better at predicting fraud and preventing it from happening. The user experience simultaneously grows with payments becoming ever more personalized and seamless.

By integrating quantum computing, the order for real-time payments can be taken to farther extremes with new processing capacities and security. Further latency reduction will give way to faster and more reliable transactions on account of the further development of 5G networks.

Such technologies are going to open ways to new possibilities in business development and the convenience of customers. The challenge for financial institutions and countries will be to keep up with those changes, making sure that they keep relevant in this fast-paced and highly exciting space. The time to learn, adopt, and act is now. In that sense, the real-time payments system Pix from Brazil, with large-reaching effects on the economy and some very important lessons, showcases the power of real-time payments to drive innovation and create the future of global banking.