Authors: Monali Kawdiya, Pavni Choudhary, Kujala Supriya, Kolanka Lakshmi Sai Swathi

ABSTRACT

The global payments ecosystem is rapidly transforming due to digitalization and financial innovation. Artificial Intelligence (AI) has become a critical enabler in digital payment systems, particularly in fraud detection, risk assessment, personalization, and operational efficiency.

This study examines how machine learning, natural language processing, and predictive analytics reshape payment infrastructures. Using a qualitative approach based on secondary sources and peer-reviewed literature, it evaluates AI’s role in enhancing security and transaction efficiency while enabling personalized customer experiences.

Findings indicate that AI significantly improves fraud monitoring and operational responsiveness. However, challenges related to transparency, explainability, regulatory compliance, and algorithmic bias remain. The study concludes that strong governance frameworks and methodological transparency are essential for sustainable AI integration in financial services.