AI Enhances Frictionless Transactions

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Artificial Intelligence (AI) has been a part of the payment security landscape for decades. According to, 75% of acquiring banks are already using AI tools in some form within their lines of defense against fraud. Whenever a consumer uses their payment card, that transaction is evaluated against various risk factors — in real time.

What is different now is that artificial intelligence can give rise to dynamic, passive authentication, across all avenues of commerce. Merchants can alleviate some of the transaction friction which results in satisfied customers which is good for business. But how does AI accomplish this?

Diversity of Data Helps Prove Legitimate Transactions

Even though AI has been used as a security tool for decades, businesses now have access to large amounts of diverse data with the rise of digital payments. That information can differentiate legitimate transactions from fraudulent ones by scrutinizing how and where information is being entered. There are hundreds of data points that an organization can take in and analyze, from historical behavior on an individual’s payment card to seeing how a given consumer would “normally” behave as a customer.

For example, a transaction occurring at 2 a.m. California time may seem suspect. But not with the aid of geolocation that the customer is on vacation in Tuscany. With the AI-derived insight that a device has been used in Florence, several times and in different locations changes the risk parameters considerably.

AI Helps Smooth Transaction Friction

Friction has long been a point of contention when it comes to an eCommerce transaction. Consumers do not like the stepped-up alerts and verifications that wind up interrupting the flow of omnichannel commerce.

With AI, passive authentication is possible and simplifies those interactions, making payments intuitive. “All the heavy data processing and heavy lifting is occurring in the background,” Jason Paguandas told And beyond the confines of financial institutions, he said that AI can prove a useful tool in the authentication and security of verticals such as consumer goods, shipping, and supply chain handoffs.

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