Pioneering payments in 2024 and beyond: AI, personalisation, and global digitalisation

Over the last couple of decades, actions from within the payments industry have proven that developing new ways to pay is integral to progressing forwards. From the boom of PayPal to the ubiquity of mobile wallets, how we live our lives has been transformed thanks to the development of payment solutions. However, with the likes of contactless payments now being commonplace, the expectation surrounding what the next generation of payment innovations will be is high.

Fortunately, with AI taking hold, shifting attitudes to spending arising, and emerging markets ripening to let loose disruption, the densely populated payments industry is poised for firms to differentiate themselves once more. In this whitepaper we will therefore look at the latest opportunities presenting themselves to payment firms and how they can seize them to aid their own growth through providing merchants and consumers alike with the developments they wish to see.

Alternative predictions on Alternative Payment Methods

Collectively the payments industry has become one of the most prosperous industries, valued at $2,476.8 trillion in terms of transactions. Yet beneath its monstrous numbers, is a precarious environment. A complex, congested, and disruptive ecosystem of technologies drives innovation. Whilst competition is its source of strength it is also the reason why no firm can ever be complacent – the market quota of payments firms is forever shifting.

A common disruption to the payments ecosystem is the introduction or development of new APMs. Not only do these technologies possess the ability to disrupt the natural order of the payments industry, but they can also have significant ramifications upon stakeholders such as businesses that use payment services. It is therefore of paramount importance for those within payments, and those which rely on payments innovations to remain abreast of the state of APMs.

For example, just 16 years ago, contactless payments did not exist in the UK but already it is now unthinkable for any retailer not to facilitate NFC considering that contactless card usage has increased 94% year-on-year in the UK between 2022 and 2023. In fact, over half of Millennials globally would likely avoid shopping at stores that don’t facilitate contactless payments. In part this has been accelerated by the fact that mobile wallets are now widely used too; a perfect example of how new innovations can influence the success of other APMs.

However, merchants simply implementing what has historically been popular and payment firms opting to improve existing systems rather than innovate new ones is not good enough for a long-term payments strategy. This is especially true considering what is occurring in developing countries; a hotbed for the future of payments. Countries such as Indonesia, Malaysia, and those across Africa offer firms a blank canvas for defining the future of payments. ‍

A new world

In India, Mobikwik connects 101 million users with over 50,000 Indian retailers; in Malaysia, RazerGold has evolved from being a prepaid gaming card to becoming a popular APM amongst Millennials and Gen Z; in Vietnam, 9pay is allowing thousands to access an e-wallet with just a mobile phone number. And that is to name just a few of the exciting payment developments across these regions which are maybe unfamiliar to the rest of the world for now. Propelled by their populations consisting of 90% of the world’s youth and having a lack of legacy systems and software in place, in developing geographies there is both opportunity for payment innovations to take off and fierce competition.  

This potential is recognised by the governments of emerging markets. They are also aware that moving their populations away from cash can bolster their economy. As a result, high levels of funding are being placed in FinTech firms here, with related startups in India breaching the billion mark for investment in 2015. With such support and other favourable conditions, developments from these nations arguably stand a high chance of spreading across the world, making the payments environment we know today, unlikely to be present in the future.

However, unknown outcomes are a symptom of innovation. As a result, the rapid development of APMs in these regions begs merchants to ask, “What will the future APMs be?”, and payment firms to wonder how they can increase their chances of success and survival amid turbulent competition. Ultimately the answers to both can only be speculated, but by paying close attention to actions relating to the latter question, stakeholders of payments tech will be best placed to keep pace with future developments.  

Partnerships, security and expansion

Collectively, partnerships, security and expansion will be important topics when predicting the future of APMs. This stems from the simple fact that security protocols are exceptionally complex in how they vary drastically between different countries. After all, security protocols in the likes of the UK, US and Europe are very different to those in Africa and Southeast Asia. Consequently, the viability of innovative APMs expanding out of developing nations into other parts of the globe, or even their technology being mimicked elsewhere is dependent upon being able to adapt to varying compliance measures.

Typically, in developing nations, new APMs rather than Western ones have tended to succeed due to them using alternative data sets for security checks instead of traditional credit checks, enabling adoption for underbanked citizens. However, their prospects of going international will be faced with heavier security resistance. Equally, difficulty will be experienced by the powerhouses of Google Pay trying to enter developed countries where familiarity is already established with other APMs.  

Interestingly, according to recent research by PwC, it is payment executives of emerging markets who feel more prepared to develop and succeed with additional technology-centric payment offerings than those from Europe and North America. Nevertheless, despite greater confidence being exhibited by those from developing nations on their prospects of creating popular payment technology, a sizeable 34% think that rather than being a threat to established banks’ payment operations, they are instead viable partners for future joint innovations.

CBDC Consolidation

The free market’s competition might be the source of a range of innovations, but a high level of competition ironically makes collaborative partnerships one of the best ways to get ahead. It has also been so successful that public bodies have become extremely interested in producing their own payment solutions known as Central Bank Digital Currencies (CBDCs). These are government-issued digital currencies, or in other words, the technological equivalent of state cash. Not only is the principle behind them revolutionary but so too are the numbers behind them – currently, 87 countries, of which represent more than 90% of global GDP, are considering their development.

Whilst cooperation would still be required for this method to become cohesive in some way across international borders, unlike productions from the free market, CBDCs within individual countries will likely have the ability to dominate domestic payment systems a lot more easily.

APMs and alternative motives

Regardless of whether the vision behind CBDCs takes off, their inclusion in the payments environment inevitably means that yet another APM is available to choose from. However, with the list of APMs continuing to grow from all angles, not only do payment options increase but so too do the opportunities for fraudsters. After all, APMs place payments into the digital realm, an environment of unlimited possibilities and notorious for facilitating sophisticated levels of crime.

Consequently, both payment firms and even firms which use them could inadvertently be putting themselves at risk of sanctions. With this in mind, the perception of APMs, not just their development is also up for debate. Fortunately, upcoming regulations form the Payment Systems Regulator (PSR) will go a long way to calm the public over the safety of payment systems.  

From 7^th October 2024, the PSR will enforce that both firms that facilitate payments being made, and those which receive them, will be liable for making refunds to victims of fraud via a 50/50 split. As a result, not only will individuals be protected from fraud losses courtesy of payment firms, but the latter will also be motivated to prevent fraud in the first place so that they have to make fewer payouts. In addition, the PSR is already publishing the performance of individual payment firms when it comes to dealing with Authorised Push Payment (APP) fraud, further incentivising businesses to become more proactive in stopping fraud in the first place.

With these initiatives in place helping to quell security concerns, the development of APMs is highly likely to continue, especially due to additional factors such as:

• Their success – streamlining payment processes, APMs stop retailers from having to worry about the 76% of UK shoppers who abandon their carts due to slow payment processes.  
  ‍
• Increasing mobile usage – adoption of APMs is being driven by our ever-growing infatuation of using our mobile devices for everything that we do. When it is considered that payments technology is harmonious with this, and that 2 billion people from developing nations have access to mobiles but not a bank account, APMs have a perfect business case which will see them continue to thrive.

Despite the fraud risks that the digital world creates, APMs are therefore highly unlikely to suddenly fall out of favour, especially when considering that more than 50% of people aged between 18-24 are likely to try to new technology-enabled tools. Instead, additional investment in security will become a crucial requirement.  

Payment preferences

Money might change hands all around the world but as seen in the last chapter, how this takes place is becoming increasingly varied. Every country, every generation, every individual has their own preference. With merchants’ main aim being to take people’s money, and payment firms helping them do so, understanding payment preferences is paramount.

Fortunately, the digitalisation of payments means that data on shoppers and their habits can easily be acquired. This, in turn, increases the likelihood of more taking place subsequently. After all, imagine what merchants could achieve by payment firms always providing customers with their preferred payment method the first time around.  

Ultimately, through the leveraging of data, personalised payment experiences become very possible, changing the journey for shoppers, the success of merchants, and the roadmaps of payment firms.

It pays to be preferred

Customising payment journeys might sound like over-engineering a simple checkout experience for some; however, when groups within any population are properly analysed, it becomes clear that collective generalisations never match perfectly with every individual. As a result, whilst market research might be useful for signalling to businesses who are stereotypically their audience, it will never provide the level of detail to inform upon individual preferences.

For example, 48% of those aged between 18 and 34 in 2021 used a mobile wallet vs. 22% of people aged over 65. Yet this insight can easily be altered depending upon the income of individuals throughout these age groups; 48% of households earning less than $25,000 annually in 2015 preferred using cash, whereas only 25% of households did if they earned between $25,000 and $49,999. In addition, even what people are choosing to purchase can impact the method that they wish to use. For instance, whilst PaySafe discovered in 2023 that cryptocurrencies were most commonly preferred for hotel stays, their popularity fell drastically for ordering takeaways.

Evidently, building a payment strategy on market research is a good starting point but no match to individual analysis. In contrast, by knowing what people’s payment preferences are and being mindful of their individual data, firms will be able to reduce checkout fallouts, boost customer loyalty and crucially decrease false declines which in 2022 cost online businesses $51 billion. All these outcomes are vital KPIs for businesses, but the importance of personalisation is best summarised by the fact that 76% of consumers get frustrated when they don’t find it available to them.

The above might sound as though consumers are being overly demanding but it is completely understandable when considering people shouldn’t feel restricted on how they can use the money which they have worked hard to earn. For example, it is becoming increasingly common for the best deals to be found online. Consequently, to benefit from these offers it has been a requirement to have the resources, inclination and ability to make an online purchase. Yet 34% of people aged over 65 feel stressed when having to complete tasks online such as shopping, and nearly half are not completely comfortable with such online activities. This research by the Vodafone Foundation culminated in the concerning discovery that elderly people are therefore having to spend an extra £1,000 each year due to missing out on cheaper goods and services available from online providers.

In addition, Gen Z have a high inclination to live a sustainable lifestyle. However, this typically comes at a cost, with eco-friendly products having a price tag which is on average 27.6% higher than their regular equivalents. Unfortunately, this leaves younger generations – who are usually on lower wages than their elders – unable to use their money in a way which aligns with their values.

Ultimately, payment preferences are therefore about more than just how people wish to spend their money; they are also about how they choose to live their lives and their values. Given the personal importance which individuals place on this, payment firms which can adapt to individual preferences will wield considerable sway in attracting retailers that wish to meet the expectations of their customers.

How can payment firms help?

As noted in the previous chapter, the payments industry is very good at creating new APMs – choice is therefore available for people to pick from based on their preferences. For example, both previously mentioned issues are now surmountable thanks to the likes of Kasssh and BNPL existing. Respectively they enable people to purchase online deals with cash and have access to greater funds when wanting to purchase more expensive items.

However, whilst these options exist, they are only valuable if people can access them when checking out. The precise value of them is strongly reflected by how many people will choose to abandon their purchase if their preferred payment method isn’t available. This is particularly true when it comes to the availability of credit cards, with 25% suggesting they would not complete their purchase without this option.

As a result, merchants must go beyond payments optimisation to truly embody payments personalisation by prioritising the correct payment methods and related perks for each individual at the correct time. Fortunately, for those hoping to have a fully flexible, reactive purchasing process which will always be able to reflect the preferences of each buyer, progress is already being made.

In fact, developments in this ambition are currently reaching a new zenith thanks to advances in AI. At its core, AI is automated machine learning that can operate at an extraordinary level, becoming increasingly accurate the more that it learns. With the power of AI, it is therefore now feasible for the preferences and behaviours of individuals – not demographics – to be learnt at a level of detail which will inspire digital retail experiences to feel 100% personal. For example, AI technology infused into payment processing platforms already enables the likes of Klarna to intelligently suggest optimal payment options such as pay later or split payments over varying numbers of months for each customer.

Moreover, the degree to which AI can personalise is quite extraordinary. This is because it is not naïve enough to presume that individuals are loyal to just one payment method in all circumstances. Instead, if harnessed correctly, it can shuffle suggestions based on what is being purchased, which – as mentioned earlier – can influence what payment method is decided upon by individuals. Plus, with payment firms and merchants alike deploying more ways to incentivise payments – too many to possibly remember – AI can ensure that the optimal method is used in terms of gaining rewards. Thanks to AI, we are now therefore on the cusp of hyper-personalisation with every digital payment.

The impact which AI can have is not limited exclusively to the digital world though. With the concept of embedded finance progressing in tandem with AI, the prospect of these novel concepts fusing together is extremely exciting. This is especially true considering that embedded finance is all about meeting the basic preference of people to make payments without having to disrupt their core activities. As a result, pairing AI’s personalisation capabilities with those of embedded finance has the potential to be highly transformational, especially when considering the development of an additional new technology which is compatible with these two concepts – virtual reality.

How can payment firms help themselves?

However, whilst it is always important to acknowledge the preferences of customers, in some instances when it comes to payments, businesses shouldn’t make it their number one priority. As controversial as this might sound, businesses must also be mindful of the negative impacts of high processing costs and low approval rates.  

As a result, another payment preference once more exists which payment firms can help with. This time, it is the preference of a merchant to find an optimal payment route. Nevertheless, AI can be of assistance here too by being embedded into payment gateways or payment processors. For instance, in just 25 milliseconds (on average), UpLiftAI by Primer simulates payment routing with all available processors of a merchant to select the one with the highest likelihood of successful authorisation.  

Paying it forwards

Payment technology adapting to the personal wishes of businesses and consumers when they are using them directly is one thing, but by no means is this the limit on how payment firms can produce outcomes which match the preferences of individuals. Instead, payment firms can help businesses percolate the preferences of their consumers far beyond their interaction at checkouts, and all the way through their supply chains too.

For example, by combining the data of customers and the ESG data of material suppliers, the payment providers of clothing firms could intelligently select which suppliers to purchase from. This will result in firms being able to produce items in a way that perfectly balances production cost and ESG impact scores based on consumer expectations.

Overall, with payment technology enabling more people to be in control of their finances, a sizeable shift is taking place not only in how payments technologically occur but also from a moral perspective. The days of money influencing actions might still be with us, but preferences, morals and values are now also having an impact on how money is paid. Payment firms which can reflect this shift by developing their technology accordingly will come out on top with customers and merchants.

Adding value - making it pay to spend

Some people like to spend money, other people are reserved in their spending. As a result, whilst offering preferred payment options to individuals can definitely help improve customer experience and lower dropout rates, sometimes more is required in order for people to spend – an incentive.

In other words, payment firms – PSPs, card providers, rails etc. – need to make it pay for their users to spend with them. However, with increasing forms of technology available, spending power being arguably split in the most diverse way in history, and ESG values being something which individuals are more conscious of than ever, what really incentivises people to part with their money is becoming increasingly complex. Paired with the cost-of-living crisis, payment firms have a challenge on their hands to encourage people to do what keeps them in business – make payments.

The importance of customer retention

Fortunately, businesses around the world find themselves in the same position as payment companies, making them a natural ally in persuading people to part ways with their money. Plus, it just so happens that customer retention to sustain repeat business is the number one priority for businesses alongside digital transformation. These two targets are attainable through giving people a preferred way to spend and innovatively streamlining digital solutions, both of which payment firms are renowned for.

The key to payment firms demonstrating this to other businesses is by showcasing how they can help them meet the wants of their customers. Adaptive payment preferences are one method, but at its core, this remains a technique to extract money from customers. What is more impactful is giving back to them, especially when over a third of Europeans reduced their spending on non-essential items in 2023. The best payment systems will therefore take a supporting role in enabling loyalty schemes to become truly bespoke. Yes, any company can offer a generic points system, resulting in the same vouchers being handed out to everyone; however, one which can track individual transactions and accredit vouchers to people on a singular basis will ensure that their customers benefit from incentives which truly serve them best. For instance, this simple but effective innovation of reacting to an individual’s personal purchases results in 63% of people being more inclined to shop with firms that offer such technology.

As already noted in this whitepaper, personalisation is crucial when it comes to APMs, and the same is true for encouraging payments via incentives. Access to brand NFTs might be great for Gen Z customers but meaningless and even alienating to Baby Boomers. Ultimately, even though loyalty rewards might be seen as methods to promote further spending, if done wrong, they can as easily result in customers feeling no longer recognised and taking their custom elsewhere. So, if personalisation isn’t an option, what else can be done?

Gamification

The traits of the digital world have been hopping out of the screen for decades now, whether it be using the names of emojis in spoken language or dancing like Fortnite characters. Of particular popularity has been gamification in real life. Ever since classic arcade games revealed that people love working towards a challenging yet achievable goal, gamification has become recognised as the “fun” way to make people engage in a desired action. It is therefore no surprise that it has become the go-to method to counteract the wisdom of money-saving experts repeatedly reminding people to think twice before they make purchases.  

By giving people a sense that they have achieved something through their purchases – a discount for their next purchase, an entry into a prize draw, free cinema tickets etc. – suddenly, spending money becomes a justifiable and fun activity. It is also highly rewarding for firms: by incorporating gamification into customer engagement strategies, brands’ engagement rise by 47%, loyalty increases by 22%, and awareness grows by 15%. Moreover, these impressive figures are expected to continue to rise given that almost 60% of Gen Z play a mobile or console game a week and their spending power is continuing to grow.

Experiential incentives

Taking the fundamentals of gamification one step further involves making spending a truly fun activity in real-life, not just digitally. This doesn’t mean that apple bobbing should be done at tills or darts thrown to pick which meal you’re served off the pub menu, instead, it should come at the end of a payment firm’s reward scheme. After all, if people enjoy games so much, why not make it their reward too?

Admittedly, incentivising via the prospect of experiences such as skydiving or football tickets is a more costly expense, but all the stats point to these promotions being far more effective. Again, this is being driven by Gen Z and Millennials; they heavily favour experience over products with 78% prioritising the former over the latter. As such, American Express have reacted to this by allowing members to bid on airline upgrades via loyalty points, something which is no doubt appreciated by Gen Z who on average take three leisure trips a year yet wouldn’t typically be able to attain such benefits through cash or a traditional points scheme.

In addition, only a handful of firms – inside and outside of the payments industry – currently offer such incentives. In fact, the number is so low that 97% of companies just stick with run of the mill transacational discounts. Evidently, an opportunity is therefore available to differentiate and draw in new customers with the prospect of experiences which now regularly fall outside of the average household's budget.

Paying it back

For centuries, spending money has been an act with little consideration for anything outside of the equation of whether what is paid for is worth its buying cost. However, that has now well and truly changed. This is reflected in how investing – an action which is unashamedly purposeful in making money – has been transformed into an environmental activity with investment in European ESG portfolios increasing by 2052% between 2005 and 2015. Moreover, it’s not just those who have the money to spare to invest who are becoming intent on their spending benefiting the environment, it is also consumers who buy everyday items. For example, between 2018 and 2022, the CAGR of everyday consumer packaged goods (CPG) with ESG claims had a sizeable 1.7 percent-point advantage over those which did not in the US.

As middlemen to facilitating people getting their hands on eco-friendly goods, payment firms are perfectly positioned to aid customers in their wish to support the planet. Moreover, they are discovering that by doing so, they can incentivise people to spend with them. For instance, Aspiration plants a tree every time a customer makes a round-up after spending, providing the perfect reason for environmentally conscious individuals to spend money. Plus, by delivering to customers data about the carbon footprint of the businesses they purchase from, spending becomes not only positive in the present but will also enable them to make more environmentally friendly decisions in the future, once more making payments an activity that people will wish to engage with. ‍

Spreading the benefits

Payment firms should not only be looking for ways to make it pay for their users to spend, they should also be applying the same principle to themselves. One of the best ways they can invest is by improving their data capabilities. Doing so in the coming year will enable them to make their offering far more attractive to additional stakeholders within the companies they are looking to sell to.

Beyond finance and payments team, the primary benefactors of this development will be those who work in marketing due to their relationship with data – a foundation of any marketing efforts – coming under imminent threat. This is because despite the phasing out of third-party cookies being near completion, 75% of marketers do not feel prepared to operate in a post-cookie-crackdown. As a result, marketers – and all the millions of businesses that rely on them to get their brands in front of the right people – will be seeking new ways to source invaluable intel to inform their efforts.  

Fortunately, to function, payment firms must process necessary data such as identification of purchased items, the price of said items, time of purchase etc. Inadvertently, payment firms are therefore sitting on a treasure trove of data which can help marketers fill the void which will exist when the insights provided by cookies is permanently withdrawn.

Ultimately, businesses are now being issued final warnings that data regulations will soon be taking action to eliminate the collection of unnecessary data. And as always, with every disruption comes an opportunity, which just so happens to be one for payment firms. Having permission to process necessary data, if they can make managing and presenting their data conducive to marketing professionals, payment tools will be seen as a pivotal asset in yet another tech stack across businesses – those of CMOs as well as CFOs.

Freezing out fraud

A commonly known remediation to fraud is freezing cards. However, this action often unfortunately comes after problems have developed to a significantly detrimental position. Coupled with the fact that UK households were forecast to lose over £1 billion to fraudsters last year, evidently something has to be done. So, what role can payment firms play to freeze out fraud for good?

Despite how contradictory it might sound, to freeze out fraud, first a thawing must take place within the payments industry for acknowledgment, conversations and intel sharing to all take place.  

Payments growing pains

Unfortunately, a symptom of the fiery innovation of the payments sector is that by continuously producing more payment options, inadvertently, further routes are cleared for fraudulent activities to take place. Moreover, it appears that fraudsters are taking full advantage of the new opportunities they are being given.

For example, due to purchases via social media platforms becoming more common, fake ads for legitimate products are being used to capture card details; malicious code is being added to retailer websites with low levels of security so that “digital skimming” can steal card data; criminals are pretending to be romantic interests or service providers to falsely attain money from individuals or businesses respectively; and even where humans aren’t meant to be involved during machine-to-machine payments, hacking is taking place to wrongly direct money to the accounts of fraudsters.

The crux of most of these scams isn’t high levels of sophistication, it is simply having easier access to a larger pool of potential victims thanks to more people operating their finances online. For instance, around 53% of adults living in the UK now use a mobile banking app. Pair this information with the now rapid speed of payments making interventions to stop fraudulent activity near impossible once it has begun, it is unsurprising that 78% of fraud cases originate from online sources. This is strongly reinforced by how in the 18 months after the UK launched their Faster Payments System in 2008, online banking fraud almost tripled.

However, correlation doesn’t always equate to causation. After all, new payment methods are not purposefully facilitating higher levels of fraud. Yet despite being unwittingly a regular accomplice for online fraudsters, payment firms must at least be seen to be implementing protective measures.

First line of defence – education

New anti-fraud processes and technologies are both regular innovations. Equally regular however are new ways for fraud to be enacted and new fraudsters. The duel between security-conscious payment firms and criminals is therefore constant.  

Unfortunately, for those within financial industries, consumers are very aware of this battle, and they currently view criminals as having the upper hand. In fact, 52% of the population believe their risk of becoming a victim has increased compared to last year. This is despite the fact that 76% of financial services firms are focusing on creating and strengthening levels of digital trust amongst customers. Interestingly, 80% of financial firms contrastingly believe a lack of knowledge on the part of UK consumers is blocking them from sharing personal information which is in turn hindering their ability to prosper from the security tools that firms are creating to keep them safe.

Clearly, another duel is therefore also present when it comes to preventing fraud. This one is between financial firms and consumers, and is centred on information. Whilst public perception suggests that they don’t think that firms are doing enough to prevent fraud, financial companies contrastingly seem to think that a lack of education on the part of consumers is behind this opinion and is also having a detrimental effect on the protection of people’s finances. As a result, despite the high-tech environment in which fraud takes place these days, a simpler approach in the form of education is sometimes best.

For maximum success, payment firms should take a two-pronged approach – educating customers and their partners. How they choose to do so is pivotal. It is all too easy to simply share preventative literature online; however, this isn’t the best way to engage with the audiences who need the most support – people under 35 and the elderly.

The difference in age might be surprising but is unfortunately one of the principal factors as to why younger people are more likely to be a victim of fraud; blind pride as a tech-native generation makes them assume that they do not need to be educated about staying safe in digital environments. In addition, young generations engage with more virtual experiences, consequently increasing the likelihood that they will be the target of an impersonation scam. To counter the over-confidence of youth, stakeholders within the payments sector have to go beyond basic means of sharing information in order to engage Gen Z and Millennials. A good example of this was in 2019 when Santander employed the cast of People Just Do Nothing to produce a creative campaign about scams which captured their attention. At the time, identity theft amongst those under 25 had risen by a quarter in the space of a year, and half of all money mules were aged under 26, making it a very important initiative.

In contrast, those of an elder demographic typically fall prey to scams due to their lack of digital knowledge. Once more, simply gathering information online therefore isn’t conducive to helping this group. Fortunately, the likes of the Co-op are going above and beyond to share with this population how they too can gain vital security skills by running highly successful in–person Fraud Awareness Days alongside local law enforcement at their community branches.

Importantly, these aren’t just campaigns that send the right message; education is also effective. For instance, thanks to 80% of companies delivering fraud prevention training to staff, CEO fraud was the least common form of APP scam in 2022, accounting for less than one per cent of total cases. Such stats reflect how effective education really is in preventing fraud. It should therefore not be limited to consumers and also be encouraged across businesses.

Amongst payment firms and across industries, the most valuable form of information sharing is therefore about the threats which they individually face. By doing so, those seeking to prevent fraud can collectively move quicker on new scams as they emerge. For example, the banking and telecoms sectors have for years shared data to pinpoint high-risk phone calls in a bid to snub telephone banking fraud. Now, this is being expanded to include mobile networks too. In addition, trials have shown that when online platforms work with payment firms and banks, advertising fraud can convincingly be stopped at source.

Evidently, education of all forms, including that of enlightening consumers on topics they were never aware of, and sharing data between parties with the shared motive of preventing scams, hold great potential to ensure that in years to come fewer than 1 in 15 UK adults are victims of fraud, like they were in 2022.

AI – a secure threat?

Despite the additional need for education around fraud illustrating that existing technologies are not enough to quash it, that might be about to change. AI has had an extraordinary impact on nearly every area of life over the last year and a half, and there is no reason why it can’t also bring benefits to the fight against fraud.

For a technology so nascent, the results from a recent Experian study are nothing short of extraordinary – 90% of businesses leveraging machine learning as part of their anti-fraud strategy have a “high level of confidence” in detecting and preventing fraud. Examples of such technology contributing to this feat include those trained in behavioural analysis, blockchain activities and Natural Language Processing (NLP), and with AI going from strength to strength, more are no doubt set to arise in the near future.

The rate at which AI can be harnessed for good is especially important because this field of development is not an exception to the battle which rages across the field of fraud – just like how AI can be used for good, it can also be used for bad motives. Considering the scaremongering surrounding AI and the fact that the whole world has witnessed how quickly it can advance, it is therefore pivotal that firms can demonstrate that AI is being developed in a way to counter its own threat. This is coupled by the fact that 80% of people already fear that they will fall victim to impersonation scams due to advances in AI.

With there being no future where AI doesn’t have an impact on fraud, it is therefore down to firms to invest in it heavily for security purposes. Without such a decision, AI becomes the means whereby fraudsters gain the upper hand. The gravity of this situation cannot be underestimated – something which the Bank of England is keen to highlight with their recent survey on machine learning. Tellingly, it reported that whilst AI is having a positive impact on preventing fraud, the greatest hurdle firms face to adopting new AI technologies is an over-reliance on legacy systems, sounding the alarm for businesses to invest in next-gen software before it is too late.

Matching payments innovation

After centuries of payments being a mostly physical, in-person activity, the industry today is a stark contrast to what went before. It is now synonymous with technology and therefore possesses the enviable but exciting capacity to constantly evolve and pivot at speed.

As seen throughout this whitepaper, despite the amazing advances in payments prior to 2024, there will inevitably be many more. However, despite AI, CBDCs, virtual reality etc. all being alternative technologies that will greatly impact the payments industry as we currently know it in different ways, some outcomes of these developments will be the same:

• Greater volume of transactions
• Increased complexity of transactions
• Larger impetus on security and regulations

No matter how the payments industry evolves in the coming years, it is therefore evident that reconciliation operations must too. That’s why at Aurum Solutions we are continually developing innovative solutions for finance teams across the globe within our next-gen reconciliation platform. Futureproofed as a fully customisable platform and designed by industry experts, just like how the payments industry can advance in infinite directions, so too can Aurum.

Don’t deploy a reconciliation platform that simply matches transactions. Together with aurum.solutions match the continuous innovation of payments.