Technology has forever changed payments and how we conduct transactions, both as businesses and as consumers. It's advancements in technology that are moving a world from paper currency to digital transactions. And, it's devices, like smartphones, that are convincing more people to change how they buy things.
Yet, as we know, online and mobile payments are not convincing for everyone. And, that's because of the continual news about fraud and data hacking. With payment security still a concern, we return to technologists to help us out. Cognitive technology is one potential strategy that is now being further developed that could be the game changer for payments and payment security. Here's why.
What is Cognitive Technology?
First, cognitive technologies come from the overall artificial intelligence technology umbrella. A cognitive technology is anything where a particular technology or device can perform tasks that were once only done by a human being. Now, these same tasks can be done by machines because they can learn, adapt, and improve to handle such work.
Some prime examples of cognitive technology are computer vision, machine learning, natural language processing, robotics and speech recognition, just to name a few. Now, those types of cognitive technologies are being added to many different systems that involve the customer experience. And, that includes payment systems and cyber security tools. Here are some examples of how cognitive technology can work within payments and payment security.
Cognitive retail payments are a way to improve decision-making within the transaction experience. Those better decisions will add to the overall customer experience in a way that is faster and more accurate than most humans could deliver.
For example, this faster transaction process could be valuable for foreign payments that often take so much longer than domestic payments. In a matter of seconds, a cognitive-based transaction system can examine the payee, their accounts, funding availability, and any holds or discrepancies. It is faster than any human-managed process. That keeps the international payments moving at a faster rate so that more transactions can be handled in a shorter time. The results are happy customers and greater revenues.
With each payment, the cognitive system learns more and understands where and how to check for additional information that further improves the experience for the customer. At the same time, the cognitive technology can gather other insights during these transactions on what the customer bought, what type of payment they used, and how the customer reacted to the experience that goes well beyond just benefiting payments. Using cognitive technology leads to new insights that marketing and other departments can use to their advantage.
Healthcare payments is a prime use case for cognitive technology. This is because healthcare models are undergoing a significant transformation from the fee-for-service model to bundled payments. The change improves service and delivers more value. However, this transition requires some fairly sophisticated analytics in order to work effectively. This includes integrating financial, clinical, and administrative data into one process to enable healthcare payments.
This is where cognitive computing can provide the solution. This technology provides a way to collect all that information at each stage of the patient's life cycle. Then, it can deliver the analytics to assess each transaction and ensure transactions are correct and secure.
Internet of Things (IoT) Payments
Additionally, cognitive technology allows for payments across devices. For example, IBM is going to integrate Visa Token Service into its cognitive technology platform. This will enable payments to be made on any connected device. That means Internet of Things (IoT) devices, including virtual assistants, like Alexa or Google Home, as well as sensors and other types of IoT systems. According to one article, "Companies can infuse secure payments across their entire product lines using the Visa Token Service, a new security technology that replaces sensitive payment account information found on payment cards with a unique digital identifier, via IBM’s Watson IoT platform."
This is another approach to creating personalized experiences for customers while meeting their needs in terms of how they want to pay for their products and services online or via their mobile or connected device. The same article uses the example of a consumer who is driving in a connected vehicle. By connecting to a cognitive platform, the driver can find out if they need replacement parts. Once they know this, they can press a button and order the part or schedule a service appointment. They can purchase gas without using a plastic card to pay at the pump. The same goes for ordering groceries or new running shoes. Now, the connected devices can order and pay for the items instead of the consumer.
Credit Card Transaction Security
Online and in-store fraud are huge concerns for any business that handles credit card transactions. For example, the Watson-powered IBM Safer Payments system was used in France to handle online transaction security. It took in 4.7 billion transactions on a real-time basis, which accounted for 75% of annual credit card transactions in France. Since cognitive computer systems can learn quickly, it starts to understand what is a legitimate transaction and what is fraud in a matter of milliseconds. The result is that it can essentially stop fraud from happening. In France, credit card fraud dropped for the first time in ten years.
More to Come
These are just a few of the many examples of how cognitive technology is changing payments and payment security. As the technology advances and more companies understand what is possible, there will be further improvements to all types of payments and greater security around sensitive data.