Visa Inc. announced VisaNet +AI, a suite of AI-powered services that address long-standing challenges and pain points for banks, merchants and consumers—including delays and confusion with managing account balances and the unpredictability of daily settlement for financial institutions.
VisaNet +AI comprises several innovative concepts and new value-added services, including Visa Smarter Posting and Visa Smarter Settlement Forecast, as well as Visa Smarter Stand-In Processing (Smarter STIP), a capability announced in August of last year. „These innovations harness Visa’s high-performance AI platform to help make payments more predictable, transparent, and speedy,” Visa said.
“Our clients, partners and cardholders look to us for actionable data-driven insights to better manage their businesses and financial lives, especially during these unprecedented times. Today we’re announcing a set of services that use AI to make it easier for consumers to manage their accounts, and for financial institutions to manage their business,” said Jack Forestell, executive vice president and chief product officer, Visa. “With our investment in AI infrastructure, we’re unlocking novel, real-time solutions to complex problems. This is just the beginning of what we can do with the predictive power of AI.”
Smarter Posting helps provide greater transparency for consumers
Today’s digital-native consumers expect real-time visibility into their finances as they increasingly conduct banking on mobile and online platforms. However, the payment experience for consumers can be inconsistent, with some purchases taking longer to finalize on their balance than others. This lag can create confusion or concern for cardholders, resulting in increased call center volume or potential overdrafts.
This delay occurs because the amount authorized in real-time at the checkout counter can differ from the amount eventually cleared from a consumer’s account. For example, the final amount can change when a restaurant-goer adds a tip at a restaurant, or when a cross-border payment happens involving multiple currencies. To prevent consumer confusion from seeing multiple charges for a single transaction, banks often delay posting the payment or updating the account balance until they have certainty about the final amount.
To help issuers create a better banking experience for cardholders, Visa developed Smarter Posting, a service that uses AI to deliver a customized score for each transaction as part of the authorization process. The Smarter Posting model analyzes transaction details and historical data to predict the likelihood that a transaction amount will remain consistent through clearing. In testing, the model has achieved 98% accuracy1 in predicting whether the transaction amount will likely remain stable, giving financial institutions added intelligence to provide a more consistent end-to-end payment experience, for example, by provisionally updating the account balance that a cardholder sees.
Visa Smarter Posting will be initially available in Europe in April 2021 and is slated to expand globally in the near future.
Smarter Settlement Forecast uses predictive modeling to anticipate cash flow needs
Every day during the settlement process, Visa enables the movement of billions of dollars across thousands of institutions in more than 200 countries and territories and 160 currencies. It’s the final step in the payment cycle, where transactions are aggregated, transfers are facilitated between acquirers and issuers, and merchant accounts are credited for the sales they’ve made.
This process requires financial institutions to strategically allocate resources—so that there is enough liquidity to meet the day’s settlement volume, without over-allocating resources that could be leveraged elsewhere in their business. Today’s volatile environment has underscored the challenge treasury teams face in predicting daily volumes and making strategic decisions.
Visa created Smarter Settlement Forecast to provide clients with customized 7-day forecasts of the settlement amount they may need on hand each day. The service uses information generated by historical settlement volumes, seasonal indicators, macro-trends, outlier events, such as those surrounding COVID-19, and real-time transaction data to provide high quality predictions of cash outflows and inflows. These forecasts can help issuers and acquirers optimize treasury and liquidity management processes, and assist financial institutions settling in multiple currencies with predictions for each currency.
Smarter Settlement Forecast is slated to be made available to eligible clients through a subscription in the Visa Analytics Platform, thereby simplifying integration for clients. Visa is currently piloting the service with three clients ahead of its formal launch planned for later this year.
Smarter STIP can improve payment experiences during outages
Visa Smarter Stand-In Processing (Smarter STIP), the first of the VisaNet +AI capabilities announced in August 2020, has gained traction among leading financial institutions globally. Smarter STIP uses deep learning to help financial institutions increase transaction authorizations during outages. Smarter STIP generates an informed decision to approve or decline transactions on behalf of issuers to provide consumers with a frictionless Visa payment experience.
Since its release, Smarter STIP has seen strong issuer interest across every Visa region. In just two months, clients around the world have added Smarter STIP to their suite of Visa solutions, including Caixa Econômica Federal, and Doha Bank.
“In Visa we have a partner that is driving new innovations in AI for payments,” said Mr. Braik Ali H S Al – Marri, Chief Retail Banking Officer, Doha Bank, Qatar. “With VisaNet +AI we can harness those innovations and drive new value for our business and customers.”
1 Visa data based on analysis comparing the model prediction of when authorization and clearing amounts will remain consistent. Analysis conducted on historical transaction data (August – September 2020) for 150 million transactions.