Will AI be the answer to decluttering the cross-border payment process? AI has helped simplify other laborious, time-consuming manual processes, and it just might offer a solution for global payment pain points.
Is it possible to talk about any topic without the conversation turning to AI these days? Artificial intelligence is rapidly reshaping the way we think about business, and global payments is certainly no exception.
Cross-border payments have always been a notoriously complex, slow process. You’ll jump through the hoops of intermediary banks and exchange rates, likely wishing there were fewer steps between your customer’s payment and your bank account.
AI has the potential to improve payments in several ways, making it easier for those trying to conduct business globally. And for those who’ve hesitated to accept cross-border payments, thinking the process is too cumbersome, AI might be a reason to reconsider and expand your business’s reach.
Cross-border payments often face fraud challenges, as payments make many “stops” along the way to their final destination. Fraudulent activities can be tricky to detect, yet AI can play a huge role in fraud detection and prevention.
AI can analyze vast amounts of data, looking for patterns that may indicate fraudulent behavior. For example, SWIFT, the global payments messaging network, announced that one of its early objectives is to use AI to develop a stronger model for anomaly detection. If identified, fraudulent transactions could be prevented in real time.
The advantage of AI-powered fraud detection is that the models can adapt to new tactics that fraudsters may deploy. By continuously learning, AI can de-risk global payments for businesses and prevent financial loss.
Companies sending and receiving global payments often face many manual processes. There’s data entry and reconciliation, possibly between multiple systems—all of which is time consuming. And at any point, human error can occur, which can be tricky to unravel due to the complexity of global payments.
AI can automate repetitive tasks so companies can focus their AR efforts elsewhere. This will not only reduce global payment processing time but also allow companies to scale if they’re processing a high volume of global transactions.
And while the hope is that you receive payments from global customers as expected, AI can also enhance collection efforts. AI can predict payment probability, allowing you to focus operations on accounts where you’re more likely to collect.
At some point in its journey, a cross-border payment will face a currency conversion. Since these payments are often slow, the currency exchange rates often end up being unfavorable to either the sender or the receiver. The expected exchange rate may change between when the payment is executed and when the exchange actually occurs.
While AI can increase operational efficiency, and immediate cross-border payments may be on the horizon, AI may have another role to play. Financial institutions can use AI to offer predictive pricing, based on a combination of historical and real-time data.
As this becomes more widely adopted, global payments can be executed in a way that decreases costs that ultimately eat into profit margins.
One of the most powerful applications of AI is predictions and forecasting. These models have existed long before generative AI (such as ChatGPT) hit the scene in late 2022. Predictive analytics rely on millions of data points, often a combination of industry-wide historical data and your company’s specific data.
“We’re moving from a backward-looking view of ‘What happened in the last three months?’ and allowing you to look at trends,” says Ahsan Shah, SVP of Engineering at Billtrust. “Then we’re layering on what we think could happen in the future.”
Historical data, such as past payment behavior from your customers, lays the foundation. And AI and predictive analytics allow you to make better business decisions in real time.
