AI is Shaping the Future of Digital Payments: PayU CTO

India is in an exciting phase of its digital payment journey. The proliferation of digital modes of payments in India is pushing the country towards ‘less-cash’ alternatives. Companies in the digital payments space are often using cutting edge technologies such as artificial intelligence (AI)/machine (ML) among others to empower the consumer journey and securing the transaction.

In a recent conversation with CXOToday, Shantanu Preetam, Chief Technology Officer at PayU India, explains how AI/ML is shaping the future of digital payments and how the company is at the forefront of this tech innovation.

AI powering digital ecosystem

While online payments already saw a massive growth after demonetization, the global pandemic fuelled the proliferation of digital modes of payments in the country

As per an RBI report, the total digital transaction volume in 2020-21 stood at 4,371 crore, as against 3,412 crore in 2019-20. With the demand of online payment surging, an interesting trend to observe was that small merchants in India – who have always relied on traditional payment systems – are also switching from cash to digital transactions.

On the state of India’s digital payments ecosystem, however, Preetam states that digital payments in India is still evolving, and this comes with a set of structural and technological challenges. Cybersecurity is a continuous challenge and India is second to the USA in hacking attempts.

“Usually, data breaches result from a human error, and it’s important to have better awareness and education on these matters. Cutting edge security technology, awareness and tighter enforcement infrastructure would create a more secure environment,” he says.

Financial institutions also need to invest in upgrading infrastructure for better merchant and customer experience. Preetam explains with an example, “Today, consumers often face transaction failures and technical declines in digital payments, because of legacy infrastructure. This gives a bad consumer experience and undermines the whole industry.”

The need of the hour for digital payment companies, according to Preetam, is to adopt the best practices for ensuring merchant and consumer safety.

“It’s important to harness cutting edge technology in risk minimization and fraud prevention. For example, through the power of AI, ML, data intelligence and predictive analytics, PayU is successfully reducing fraud, risk and improving security of transactions.”

“The technology platforms constantly tweaks algorithms, tests which attributes are most relevant, and generate compound signals to help precisely identify and block fraud, no matter which network or device a merchant is using for his digital payment transactions,” he says.

The company’s proprietary risk engine, developed globally for the PayU platform, is built for internet businesses facing evolving fraud threats. The in-house risk management tool is capable of processing advanced rules based on multiple parameters.

The company has also deployed SHA512 and 2048 SSL Key encryption algorithms and benchmarked risk assessment processes to prevent frauds amongst merchants. Importantly, PayU’s integration with Wibmo has helped to offer innovative One-Step TM frictionless device-fingerprinting, authentication through downloadable apps, and behavior modeling for fraud detection to its customers, he says.

Helping SMB merchants digitize

The company is helping small merchants who are taking the digital route. According to Preetam, “We are offering end-to-end digitalization solutions for SMBs to help improve efficiency and power business growth while also solving pain points”

Highlighting some of the key digitalization initiatives of the company, he says, “Using PayU platform, SMBs can create an online presence, collect payments, set up a professional website and payment gateway quickly and easily without coding or without a developer.”

The company helps SMBs generate professional invoices and collect payment through excel sheets, blogs, web pages and other simple methods.  It offers simple integrations for merchants, and is focused on adopting and offering more low-code & no-code development.

PayU also offers a range of products which support SMB needs. As Preetam points out, PayU’s enhanced payouts suite lets merchants make bulk disbursals to vendors, partners, employees, and customers directly, streamlining operations.”

Through partnerships with organisations such as Zoho Books & Woo Commerce, PayU is accelerating digitalization by ensuring a seamless payment experience for merchants. Associations such as the ones with Shiprocket Social and Quick eSelling enable PayU merchants to launch, manage and optimize online stores.

According to a report, the country has 425mn smartphone users, 700mn internet subscribers and has one of the fastest paces of digital adoption. This is still an untapped area for small merchants.

In 2019, PayU launched its multifunctional PayU mobile app in response to SMBs’ business needs. Preetam says, “With the PayU mobile app, merchants can conveniently track their businesses on the move, monitor business performance, get real-time updates and request for payments, allowing them to manage their business on-the-go. A simple user-interface delivers rich capabilities to view and track transactions through a dashboard, giving merchants’ quick access to important business data.

AI/ML is the way forward

According to Preetam, AI and ML has always and will continue to be the cornerstone for PayU’s technological evolution and innovation.

“In addition, we will invest in other disruptive technologies such as blockchain. It will focus on cloud-agnostic, seamless integrations and adopt more low-code/no-code development. Another key area PayU is heavily investing in is Serverless Architecture Paradigm and FaaS (Function as a Service),” he mentions.

In the coming years, there will be a greater incorporation of technologies like AI, Machine Learning and IoT in providing fast, safe, customized digital payment solutions. Given the rapid pace of digitization in India, there is a huge shift in consumption patterns and massive quantities of data are generated.

“AI, Deep Learning, ML, and data lakes/data warehouse methodologies are helping large enterprises improve efficiency and boost profitability. For smaller organizations, such advanced technologies can accelerate their growth immensely and enable businesses to mine valuable insights from data, says Preetam.

“AI/ML will also play a key role in cybersecurity to help identify threats, enable fraud preventive measures, and risk mitigation in the digital payment space. Disruptive technologies like blockchain and cloud computing will gain more traction, and will become a more integral part of the payment industry,” sums up Preetam.