Within financial services, artificial intelligence (AI) is typically deployed in various efforts to identify and stop fraud. But advanced technologies can also be leveraged to help financial institutions (FIs) operate more efficiently, improving the end-to-end payments experience for their consumers.
It’s that holistic approach that has driven Visa’s expanded AI initiative announced Tuesday (Feb. 2). The company said it has launched VisaNet +AI to enhance posting and settlement, and eliminate the guesswork tied to knowing where funds will hit and when. For chief financial officers (CFOs) and treasurers tasked with corporate management, Visa is aiming AI toward forecasting and planning.
New services include Visa Smarter Posting and Visa Smarter Settlement Forecast, and VisaNet +AI will also include the previously announced Visa Smarter Stand-In Processing (Smarter STIP), which launched in August of last year. At a high level, the solutions can be harnessed to help consumers manage their finances in real time, quickening the time it takes for accounts to settle. Benefits accrue to banks, too. Greater transparency translates into less confusion on the part of account holders, with the positive ripple effect that comes from having fewer calls into call centers.
Gourab Basu, vice president of global product at Visa, told PYMNTS in an interview that “for the first time, with the VisaNet +AI capabilities, we are using AI to solve longstanding issues for consumers, for banks, for issuers and for acquirers.” AI, he noted, works well, when the data it works with is well structured — a hallmark of payments transactions.
“The key in processing a transaction is speed because the consumer is waiting,” said Basu. “Doing this all in real time and responding in real time is the key.”
Smarter Posting — Looking For Stability
As done through traditional processes, delays occur when the amount to be debited or credited, authorized in real time at the point of transaction can differ (sometimes significantly) from the amount that is eventually cleared from a consumer’s account. Cross-border transactions, for example, can vary widely from initiation to final settlement, impacted by foreign exchange (FX) rates. With Smarter Posting, said Basu, “we’re making a prediction about whether this amount in the authorization will stay the same or change.”
Visa said that Smarter Posting leverages AI to deliver a customized score for each individualized transaction (analyzing payment details and other historical data) as it winds its way through the authorization process. The score “predicts” the likelihood that a transaction amount will remain constant as from initiation to settlement. Visa has said that the model has shown 98 percent accuracy in predicting that stability, allowing FIs to provisionally card account balances.
Smarter Positing will be made available in Europe beginning in April of this year and will expand globally soon thereafter.
In the settlement process, which might be likened to the last mile of payments, merchant accounts are credited, and information and funds flow between acquirers and issuers. Visa’s clients — in this case, the acquirers and issuers — need adequate liquidity to cover daily settlement volumes. It’s a daily balancing act to achieve the optimal level of liquidity while freeing up resources that could be put to work elsewhere in the firm, optimizing treasury functions.
Visa has said that its Smarter Settlement Forecast can give those issuers and acquirers seven-day forecasts that project daily settlement needs. Those forecasted settlement amounts are generated through a range of inputs, including historical settlement volumes, seasonal indicators, macro-trends, and even outlier events such as the pandemic.
According to Basu, the smarter settlement forecast uses historical data sets to examine how much money has moved between banks over the last two years, tying that past performance to real-time and recent data (over the past few days) to see how much an issuer will need or how much an acquirer might expect to be paid as part of settlement activities.
The company has said that the Smarter Settlement forecast will be made eligible for clients through a subscription in the Visa Analytics Platform. Visa is currently piloting the service with three clients ahead of its formal launch planned for later this year, the company said Tuesday.
Smarter STIP — Working Throughout The Outages
Basu also gave PYMNTS an update on Visa Smarter Stand-In Processing (Smarter STIP), the first of the VisaNet +AI capabilities announced in August. The service uses “deep learning” to help FIs boost transaction authorizations during outages.
“The problem we were trying to solve … was when an issuer [experiences] an outage — there’s unscheduled downtime or some telco line gets dropped for a period of time,” explained Basu. “We wanted to keep the consumer experience frictionless. The consumer shouldn’t have to know that for a period of time, there is a connectivity loss.”
The goal is to replicate — in an informed, anticipatory manner — what the issuer would have done.
“In the past, in the absence of AI, we would have to decline most transactions instead because the rules were very static,” explained Basu. “Our expectation is this new intelligence will help [clients] customize and improve the consumer experience.”