In today’s fast-paced digital era, artificial intelligence (AI) is no longer a futuristic concept, it is a driving force behind the transformation of industries, and digital payments are no exception.
Across the globe, and increasingly in Sri Lanka, AI is shaping the future of financial transactions, streamlining processes, enhancing security, improving customer experiences, and opening up new economic opportunities.
Digital payment platforms, which once relied heavily on traditional coding logic and human intervention, are now being powered by intelligent algorithms capable of learning, adapting, and predicting behavior, from fraud detection to personalised user experiences, AI is redefining how we pay, how businesses operate, and how financial ecosystems evolve.
Smarter, safer, and faster transactions
One of the most significant advantages AI brings to digital payments is enhanced security and fraud detection. Traditional systems often struggle to keep up with increasingly sophisticated cyber threats. AI-driven fraud detection tools can analyse vast amounts of transaction data in real-time, identifying unusual patterns and flagging potentially fraudulent activity before it affects users.
Machine learning algorithms, an essential component of AI, constantly learn from past transactions to improve the accuracy of fraud detection. Whether it’s identifying unauthorised access, irregular spending behavior, or location mismatches, these systems work around the clock, offering proactive protection for consumers and merchants alike.
AI also reduces the number of false declines instances where legitimate transactions are incorrectly flagged and rejected. This balance between security and convenience is crucial in maintaining consumer trust and ensuring seamless payment experiences.
Personalisation and customer experience
AI is transforming the way digital payment platforms engage with users. By analysing behavioural data, preferences, and transaction history, AI can tailor experiences that are uniquely suited to each customer, from suggesting payment options to offering discounts based on past purchases, AI enables a highly personalised and frictionless journey.
For instance, digital wallets or payment apps may use AI to recommend the best time to pay bills, remind users of recurring payments, or even offer real-time insights on spending habits. These personalised interactions foster deeper engagement and customer loyalty, especially among digitally savvy younger generations.
In emerging markets, including Sri Lanka, where digital adoption is rapidly accelerating, these intelligent features are playing a crucial role in onboarding new users and encouraging consistent use across urban and rural demographics.
Boosting operational efficiency
On the backend, AI enhances operational efficiency for banks, fintechs, and merchants. Chatbots and virtual assistants powered by natural language processing (NLP) are handling routine inquiries, enabling 24/7 support with minimal human intervention. Payment disputes, transaction confirmations, and balance inquiries can now be resolved quickly and accurately through AI-driven interfaces.
AI helps optimise risk management by evaluating creditworthiness in real time. In contrast to traditional credit scoring models that rely on static and limited data, AI can analyse alternative data such as mobile phone usage, utility payments, and e-commerce behaviour. This expands financial access to previously underserved populations, supporting inclusive finance, a critical goal for developing economies.
Cross-border and real-time capabilities
AI is also revolutionising cross-border payments. By automating currency conversions, compliance checks, and risk assessments, it accelerates the speed and reduces the cost of international transactions. For small businesses and freelancers in Sri Lanka looking to access global markets, this efficiency can be a game-changer.
Real-time payments once a luxury are now becoming the norm, and AI ensures that these payments are not only instant but also accurate and compliant. From peer-to-peer transfers to large-scale enterprise payments, AI ensures every transaction is verified, recorded, and optimised.
Challenges and the path forward
Despite its numerous advantages, the integration of AI into digital payments does not come without challenges. Data privacy, algorithmic bias, and regulatory concerns need careful consideration. As AI systems make increasingly autonomous decisions, it becomes essential to ensure transparency, fairness, and accountability. Governments and regulators must work closely with financial institutions and technology providers to build frameworks that encourage innovation while protecting consumers. Sri Lanka’s ongoing efforts to digitise its economy provide a strong foundation, but success will depend on education, investment, and collaboration across sectors.
A future shaped by intelligence
Artificial intelligence is not just an enhancement to digital payments it is the foundation of the next generation of financial services. By delivering speed, security, personalisation, and scalability, AI empowers individuals and businesses to transact with confidence and convenience.
In Sri Lanka and beyond, the digital payment landscape is evolving rapidly. With AI at the helm, the possibilities are endless: a more inclusive financial system, smarter business decisions, and an economy that moves in real time. As we embrace this AI-powered future, one thing is clear, how we pay is only the beginning.
The writer is Head of Products and Innovation at CrossBorder Payments (Pvt) Limited.
