AI-powered shopping revolution: Visa, Mastercard embrace artificial intelligence for future transactions
In the coming months, major payment companies such as Visa and Mastercard are set to revolutionize online shopping with the introduction of AI-driven product recommendations. This shift in consumer behavior promises to reshape the shopping landscape, potentially leading to a few strong brands emerging.
Visa has recently unveiled its new feature, "Visa Intelligent Commerce," which enables users to leave their credit card with a preferred chatbot for seamless online shopping. Jack Forestell, Visa's Chief Product and Strategy Officer, has highlighted that AI agents will soon be responsible for searching, selecting, buying, and managing products on behalf of consumers.
Similarly, Mastercard has presented a similar feature, albeit on a smaller scale. The use of AI for shopping could represent the next big revolution in shopping after the internet, as companies need to appear in AI recommendations to be present.
One of the key benefits of AI-driven shopping is improved fraud detection and security. AI enables real-time, more accurate detection of fraudulent transactions by analysing multiple risk factors such as location, device ID, and user behavior. Visa and Mastercard employ generative AI and machine learning models to block suspicious transactions instantaneously, thereby reducing fraud losses and building consumer trust in digital payments.
Moreover, Visa is evolving from a pure transaction processor to a platform that provides anonymized, aggregated data signals to AI shopping agents. This data-driven personalization enables hyper-personalized product recommendations, positioning Visa to capture value not only from merchant payment processing fees but also from advertising and marketing budgets, substantially expanding its total addressable market.
However, there is uncertainty about what happens if the AI makes mistakes during shopping, and liability is still unclear. Visa claims they will find ways to handle AI mistakes, as reported by Handelsblatt. The credit card is equipped with various shopping limits to save customers from detours via websites and payment portals, aiming to reduce drop-offs during the online shopping process.
In a demonstration video, Visa showcases examples of AI completing purchases for items like a coffee maker, headphones, and flowers. Users are increasingly asking AI models like ChatGPT, Gemini, or Perplexity for recommendations instead of searching on Google. This shift towards AI-powered shopping could represent a substantial competitive advantage for payment companies in the emerging AI commerce ecosystem.
References:
- Visa's AI Strategy: Transforming Commerce
- Visa's AI Strategy: Building Consumer Trust
- Visa's AI Strategy: Empowering Merchants
- Visa's AI Strategy: Enhancing Security
The integration of AI in finance and business, as demonstrated by Visa and Mastercard, might lead to a shift in online shopping habits, as AI agents become responsible for the search, selection, purchase, and management of products on behalf of consumers. Improved fraud detection and security are key benefits of this AI-driven shopping, with Visa and Mastercard using generative AI and machine learning models to block suspicious transactions in real-time. The AI commerce ecosystem could provide a substantial competitive advantage for payment companies, with Visa potentially capturing value not only from merchant payment processing fees but also from advertising and marketing budgets.
