How Vendo Uses Artificial Intelligence (AI) in Payment Processing

In the payment processing industry, AI has produced multiple benefits, particularly for e-commerce merchants. 

It’s fascinating to see how artificial intelligence (AI) and machine learning are being leveraged to solve complex business challenges. In the payment processing industry, AI has produced multiple benefits—particularly for e-commerce merchants. 

It’s important to remember that AI technologies are not merely “set it and forget it” solutions. The intelligence portion of AI still requires some human monitoring. In fact, AI has become a tool for businesses to enhance their capabilities, rather than a threat to replace jobs—something that has been a hot-button topic lately. 

While the impact of AI can be difficult to isolate, it’s undeniably contributing to overall success.

How Does AI Technology Benefit E-Commerce Merchants?

A significant challenge in AI today is the ability to explain and interpret how its work. AI models often operate as a “black box,” where the internal workings are not readily understandable to human users. This lack of transparency can make it difficult to trust the decisions made by AI, particularly when these decisions can have significant impacts on businesses.

Still, AI can dramatically improve efficiency and effectiveness when it’s integrated correctly. For example, Vendo’s journey into AI began with a shift from manual review systems to automated AI-based systems. We recognized the necessity for data-driven insights, specifically in fraud detection.

The implementation of AI in reviewing transactions eliminated manual errors and saved hundreds of work hours, making our team dramatically more productive. Having AI as a tool also allowed our experts to focus on higher-level tasks that ultimately benefit our merchant-clients.

Above and beyond efficiency, the following are just a few of the areas within which AI has had a significant impact on merchant success.

Predictive Analytics

AI tools can provide valuable insights that allow businesses to anticipate future trends and adapt accordingly. This proactive approach can empower businesses to optimize their strategies and improve their results. Predictive analytics involves situations such as identifying problems before they become serious issues, adjusting pricing strategies, or anticipating increases in demand.

Payment processing innovation depicted by lightbulb held by robot hand
Dynamic Pricing

Many online merchants overlook the importance of continually reassessing their pricing strategies, missing out on significant growth opportunities. By adopting AI-powered pricing and other revenue growth tools, such as those offered by Vendo, e-commerce merchants can optimize their revenue.

AI-powered dynamic pricing uses machine learning algorithms to set optimal product prices in real-time based on data from past transactions. By analyzing various factors such as time, customer’s location, device, and browsing history, it adjusts prices to cater to different customer segments and market conditions.

Vendo’s AI pricing system, ARIA, exemplifies this by learning daily from data spanning 46 operating systems, 1054 browsers, eight devices, and 238 countries. It adapts to new situations and uses a control group to compare results, ensuring that merchants receive the most insightful recommendations.

With Vendo’s extensive reach across numerous countries, interacting with billions of shoppers and numerous products, the AI system is able to garner deeper learning and insights. This is similar to Google’s method of optimizing search results by analyzing user search trends and patterns.

The application of AI in this area can be complex and requires extensive data about the customer. As such, it’s not something that all businesses are ready or able to implement. For those that do, however, it can be a powerful tool for optimizing pricing strategies and boosting revenue.

AI in payment processing depicted by robot hand pressing on laptop keyboard
Reducing Instances of Fraud

AI technology is invaluable for payment processing platforms in bolstering security and combating fraud. It significantly speeds up online transactions by swiftly identifying abnormalities and suspicious activities in large datasets, which would be time-consuming if done manually. 

AI’s advanced pattern analysis capabilities can also provide insightful data that prepares companies to tackle fraud effectively. By employing sophisticated, customizable data analytics, AI systems can be adapted to detect signs of fraud—including likely fraudulent activities, cyberattacks, bot takeovers, and false declines.

As a leading payment processor, Vendo has been well-versed in AI’s capabilities for over 15 years. One such AI application is Vendo’s Fraud Identification System (FIS). FIS automates the security process by gathering merchant order details, linking orders in the database, and examining hundreds of variables using machine learning. It then evaluates each transaction, making decisions on approval, declining, or seeking additional information, and scrutinizes transactions for accuracy and anomalies. This system is tailored to each merchant, which means different merchants might have slightly varying processes.

The Bottom Line

AI offers tremendous potential for businesses, but its successful integration requires ongoing effort, understanding, and adaptation. The most effective AI solutions are those that are closely aligned with a business’s specific needs and are part of a broader strategy for success. It’s a complex, evolving field but one that is increasingly important in today’s business world.

If you are interested in understanding how Vendo’s AI solutions for payment processing can apply to your business, please connect with us to learn more.

About Vendo: Vendo offers comprehensive payment processing services to e-commerce merchants, including those in high-risk industries. Our innovative, AI-powered tools offer merchants simple, secure, and seamless payment solutions, along with expert customer support from integration to end-user concerns. Our expert team works 24/7 to shape your vision into reality.