Problems that artificial intelligence and real-time payments can solve in e-commerce

Artificial intelligence (AI) and real-time payments are opening up new opportunities in e-commerce and the sale of digital goods – two rapidly growing segments of the digital economy that have unmet payment needs, according to a report by payment services provider Rapyd.

The main factor driving demand for AI in these markets is the growing threat of fraud. As e-commerce traffic increases, it becomes increasingly difficult for e-commerce sellers and digital goods sellers to monitor potentially fraudulent transactions in a way that does not degrade the customer experience. In theory, AI-powered fraud management tools help online sellers and B2B sellers quickly flag and assess suspicious transactions. These results can, in turn, reduce the number of chargebacks and transaction disputes.

Why fraud is an e-commerce problem with potential AI solutions

Fraud and chargebacks are two of the biggest issues facing e-commerce and digital goods sellers. The same can be said in both the B2B and B2C worlds. The Rapyd report found that approximately 48% of B2B sellers and 46% of e-commerce retailers cited fraud as their top business problem. Additionally, 31% of B2B sellers and 30% of e-commerce retailers cited the risk of chargebacks as their top concern.

In January, Raypd surveyed 1,000 business owners and payments decision-makers across eight high-opportunity industries. Participants came from 10 countries, including the United States, Canada and the United Kingdom.

In addition to improving fraud detection, AI can also be used to improve customer service. This may include creating chatbots that act as a virtual customer service representative, mimicking human conversation through voice or text interactions.

On the payments side, the trend towards real-time payments continues to accelerate as online retailers and B2B sellers seek immediate availability of funds. They are also looking for ways to improve cash management and provide a smoother customer experience.

“Payment speed has never been more important than it is today, and the adoption of real-time payments around the world is proof of this,” the report said. “Real-time payments are rapidly gaining traction around the world, eliminating the complexity and prohibitive costs associated with traditional payment methods. This change is due to the need to overcome challenges related to errors, delays and increased risks of international transactions. Companies around the world are increasingly using real-time payments as a solution to speed up payment processes.

AI trends in e-commerce

When asked what trends they predict for the next 12-18 months, 46% of respondents reported greater acceptance of real-time payments in e-commerce, and 40% reported greater use of AI applications. Other trends mentioned include the increased use and acceptance of virtual cards (30%) and buy now, pay later loans (30%). Respondents could indicate more than one answer.

Since payment service providers will provide these technologies, companies need to evaluate them to choose the right partner.

When asked what criteria they use to evaluate payment providers, 40% of e-commerce retailers and digital goods sellers cited ease of integration, and 31% looked at payment speed. Other criteria include the availability of fraud management tools that reduce the risk of regulatory and financial crime (26%) and tools that reduce fraud and financial risk (23%).

“When evaluating a payment service provider, ease of integration is consistently ranked as the most important factor across all industries and regions surveyed, which directly correlates with speed and convenience,” the report says.

The reasons why B2B sellers and e-commerce sellers prefer specific payment methods vary. Among B2B sellers, the most common reason for accepting a payment option was the speed of receiving or sending the payment (66%). Comfort of acceptance came second (62%). A third had a long relationship with their financial institution or payment service provider (43%).

Reasons why online sellers choose payment options

Among e-commerce sellers, the most common reason for accepting a payment option was convenience of acceptance (59%). In second place was the solution that was the fastest way to receive or send payments (51%). In third place was the option that turned out to be the most popular payment method on the market (36%).

As the Rapyd report shows, as the travel industry recovers from the pandemic, travel agencies are preparing for a future in which online sales could account for 76% of total travel and tourism revenues by 2028. The result would be “secure and efficient transaction processes that keep pace with the rapid growth and unique needs of the global travel market,” the report said.

Respondents were asked to indicate the most important fintech trends in the sale of online travel services in the next 12-18 months. 43% of them indicated the adoption of real-time payments and 35% indicated the adoption of AI applications. Other online travel agency payment options that are gaining popularity during this period include pay-by-bank solutions (32%) and the acceptance and use of virtual cards (27%).

Threats mentioned by online travel agencies

Among online travel agencies conducting business sales, the greatest threat to their business is the risk related to financial data security (49%). Risks related to compliance with laws and regulations came next (43%). About 34% of agencies cited fraud risk and 32% cited chargeback risk.

Among online travel agencies selling to consumers, the greatest threat to their business is compliance and regulatory risk (53%). Threats to financial data security came in second place (49%). Additionally, 40% of respondents cited fraud and 24% cited chargebacks.

The most common reason why online travel agencies selling to companies preferred a specific payment method was the speed of the transaction. 54% of respondents mentioned the speed of receiving payments, and 51% mentioned when sending payments. The convenience of acceptance was mentioned by 52% of respondents when receiving payments and 48% when sending payments.

Among online travel agencies serving consumers, payment speed was indicated by 46% of respondents when receiving a payment and 37% when sending a payment. The convenience of acceptance was mentioned by 51% of respondents when receiving payments and 42% when sending payments.

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Register on free subscription to Digital Commerce 360 B2B News, published 4x/week. Covers technology and business trends in the growing B2B e-commerce industry. Contact Mark Brohan, Senior Vice President, B2B and Market Research, at [email protected]. Follow him on Twitter @markbrohan. Follow us on LinkedIn, TwitterFacebook and YouTube.