The technology landscape is moving at an accelerated pace, with emerging products and services bringing new innovations for businesses and consumers. Some of these innovations have quickly gained popularity by empowering consumers with faster, simpler solutions. One such emerging technology is the rise of generative text AI platforms, namely OpenAI’s ChatGPT.

Two months after going live, Open AI’s free-to-use ChatGPT platform reached 100 million users in January 2023, becoming the fastest software adoption ever. Its surge in use catalysed investigation from businesses and governments to determine the tech’s impact on their operations.

How has the payments sector previously reacted to tech innovation?

E-commerce has gone from strength to strength over the last decade, with increased connectedness and diversification offering more options to buyers and sellers. Increased growth has been made possible via secure payment gateway providers, which have diligently employed the latest technology to respond quickly to market changes and consumer preferences.

In contrast to traditional financial institutions, fewer legacy systems in the payments space enable the ability to react and innovate at pace. Exploration into embedded finance, cryptocurrency, peer-to-peer wallets, the metaverse and DLT systems has been successful. In doing so, the payments sector has achieved increased payment-making speed and versatility – for example, enabling cryptocurrency payments – as well as lower risk, and accessing new and emerging markets for merchants.

Naturally, integrating these technologies has not been without its challenges, but each has provided its benefits, be it through application or learning. It is time to investigate if integration can be replicated with payments and AI.

What is ChatGPT and what does it have to do with payments?

AI-powered chatbots, like ChatGPT, are built off of LLMs (Large Language Models) and fine-tuned using machine learning algorithms. OpenAI’s platform, for example, sources publicly accessible information deemed correct and relevant up until 2021.

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By GlobalData

One of the key advantages of rising generative text AI is its ability to generate clear and concise information at pace. This has led to rapid information access that has been praised for its accuracy. However, some experts warn that these platforms are not yet ready for enterprise application.

The benefits generative text AI can produce for the payments industry include various advantages. Once generative AI platforms integrate payment gateway technologies and payment-making functionalities, consumers can source, compare, and buy products at an accelerated rate. AI can do the heavy lifting when it comes to online shopping, expediting the search process to almost real-time by producing near-instant answers based on user prompts.

Integration, therefore, can save time for users. The instantaneous nature of these platforms can potentially improve user experience (UX) by removing the process of ‘searching’ for products, as they can be sourced automatically. The implications of this are significant; customer journeys, from the initial prompt to selection and then payment, can be reduced to a matter of clicks. Equally, information requests can be sourced from numerous international websites, making product comparison over best price and availability far easier. For merchants, this increases awareness for international customer bases, which can expand in turn.

The crucial element for this new payment future is the collaborative and compliant relationship between AI platforms and payment gateway providers, with the latter moving fast to service emerging customer demand.

Is payment integration into AI ready now?

For now, safety concerns on generative AI platforms are receiving increasing scrutiny. This is partially down to early misuse by platform users. Users have managed to alter request wordings to trick the AI into providing answers to requests it previously refused. A movement named Do Anything Now (DAN) has sought to identify the vulnerabilities in the way AI contemplates information requests, claiming to have jailbroken the technology. ChatGPT under DAN programming has been described as ‘AI unchained’. Although some users have heralded the jailbroke version as more authentic, others have voiced concern about the risk posed to users once the AI is untethered from ethical frameworks.

With this in mind security represents another concern. Protecting sensitive customer information is of critical importance to ensure payments are made safely through AI platforms. Cybersecurity experts have argued that the security of generative AI platforms are not yet ready for enterprise or e-commerce applications. If firewalls cannot guarantee user protection, it will slow the progress of payment service integrations. Equally, without proper safeguarding, users’ trust in AI can be utilised by hackers with malicious intent, who can pose as the chatbot to obtain sensitive user information, such as passwords and card details.

Further examples suggest the software itself not being as robust as it would need to be. In March 2023, users reported being able to see other users’ chat window conversations.

The intersection between AI and payments

The new wave of generative AI is in early development. This fact is promising; early teething problems around user safety, information accuracy and infrastructure security are to be expected. As these platforms mature, they will adopt a responsibility for increased security and user safety. The payments industry will continue to perform its due diligence on these developments, while Transact365 is well poised to assist merchants’ exploration into this new technology.

If security, user safety, and compliance with legal frameworks (inc. clear KYC) can be achieved, merchants and payment companies will explore the intersection between AI and payments in greater depth. We’ve only seen the tip of the iceberg when considering the applications of generative AI technology, not least the eventual realisation of an online shopping method that increases market reach for merchants and boosts customer UX and speed of purchase. At Transact365, we’re very excited to see what the future holds for AI and payments.

Scott Major is CCO at Transact365