The Payments sector is increasingly harnessing the benefits of AI technology.

Tangible use of AI within Payments is evidenced by the acceleration of online banking, digital wallets, and the more recent use of payment authorisation via facial recognition. Voice shopping and actionable audio adverts are also becoming more prominent forces on the scene. In addition to being instrumental at the point of sale, AI can streamline backend processes, help to detect and minimise fraud, analyse transactional data trends, personalise e-commerce experiences and automate onboarding. Without doubt, AI is already a key player in the Payments ecosystem, and its significance to this sector looks only set to increase. We touch on some of the key benefits and risks for the Payments sector below.


For both merchants and payment services providers, AI can be useful in automating tasks, reducing margin for error, and improving efficiency. By way of example, real-time fraud detection can be accentuated through AI tools, given their capability to review significant quantities of data at speed, extract potential fraud incidents, flag associated risks and ultimately serve as valuable fraud mitigation assets.

Invoice payment processing can also be facilitated by AI, removing the need for manual data entry and reconciliation. Similarly, can onboarding processes via AI complementing automated document authentication and identity verification. For transactions, the ability to store and automatically populate payment details via AI can expedite the payments process and allow payers to quickly access multiple payment methods via their preferred devices.

These automation efficiencies can improve the speed, efficiency and safety of onboarding and transaction processing, in turn bolstering productivity and consumer confidence for payment service providers and their merchants.

Data analysis

AI data analytics can allow both payment service providers and merchants to access and analyse data more granularly than ever before to improve their market and customer insights and promotional activities. Transaction patterns, browsing habits and information on demographics can be collated and analysed by AI tools alongside wider data sets to maximise understanding and anticipation. By doing so, AI tools can help to predict future payments, not only in terms of which products and services consumers and businesses are inclined to spend money on, but also on the methods they are most likely to use when doing so.

The ability of AI to monitor trends and improve data analytics can be leveraged by payment service providers and merchants to inform their marketing, opportunities, investment, and strategy. Those players confidently moving beyond their exploratory phase of AI and capitalising on the advantages in these areas will no doubt reap the benefits.


However, AI in Payments comes not without risk, both practically and legally. Whilst the technology can be used successfully by payment service providers and merchants, it can also be used by fraudsters maliciously to exploit data, improve impersonation, and facilitate convincing and elaborate scams.

Legally, the use of AI and related data and outputs gives rise to complex considerations with regards to data protection law compliance (where personal data is involved), regulatory compliance (particularly where tools are used to support regulated processes, such as onboarding) intellectual property licensing and ownership and the allocation of risk across those involved in the AI supply and procurement arrangements.

Provided the risks are appropriately navigated and mitigated, the further integration of AI across the Payments sector is a welcome development. As the Payments sector use evolves, those taking advantage of AI technology should ensure they are doing so compliantly and in a manner that maximises their ability to lawfully commercialise outputs.

At TLT, our specialist lawyers across Payments, data protection, technology, competition, regulatory compliance, and wider disciplines are closely tracking the legal and regulatory impact and developments for those leveraging AI. We recently launched TLT’s AI Forum - a series of events considering how AI is changing the way we live and work, and what organisations should be thinking about when designing, deploying and exploiting AI technology. In whichever context you may have concerns or are looking to use AI technology, our experts can support your legal requirements, so please do get in touch.

Contributor: Lucy Evans

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at November 2023. Specific advice should be sought for specific cases. For more information see our terms & conditions.

Written by

Alex Williamson

Alex Williamson

Date published

29 November 2023

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