Pivoting to digital payments? How AI is safely fast-tracking acceptance

As more of our lives are lived online, the trust once established with a signature on a thick sheaf of papers is no longer as relevant — and a firm handshake, at least in the age of COVID-19, is no longer advisable.

Many small, cash-only businesses worldwide found themselves at a deep disadvantage as social distancing recommendations took hold, and shoppers started to seek out touch-free payment options or simply shifted their spending to online.

These small enterprises don’t typically have significant cash reserves. In the United States, a 2016 study by JPMorgan Chase showed that the median small business has an average daily cash balance of $12,600, and a quarter of small businesses have a cash buffer of less than two weeks in the event of a total revenue shutdown. And it’s not always easy or cheap to pivot on a dime to digital payments.

Certainly digitization has made acceptance of electronic payments easier than ever before, but establishing trust between players such as merchants and acquiring banks in the digital ecosystem remains complex – and understandably so, in part because of the know your customer (KYC) process. That’s how acquiring banks understand the identity of the merchants they want to serve before beginning to do business with them, and it’s a practice to guard against anyone using Mastercard’s network to launder money, for example, which protects all the participants in the transaction and helps prevent consumers from falling victim to financial crime.

The often manual and paper-based onboarding process for merchants, including the KYC requirements, can take two to three weeks for those looking to accept electronic payments.

But KYC doesn’t have to be time-consuming, says Arpit Ratan, co-founder of Mumbai-based Signzy, whose artificial intelligence-powered onboarding solution can trim turnaround time to an hour or less. “When accepting electronic payments is a matter of survival for small businesses, there isn’t a moment to waste.”

Signzy’s Smart Onboarding solution uses AI and optical character recognition to automate an acquiring bank or a payment facilitator’s application and underwriting journey. Since the onset of the pandemic, it also features a new plug-and-play video conference solution that combines facial recognition, geolocation, video forensic analysis, digital forgery checks and other tools to remotely verify merchants and their documentation. The company has since seen a more than threefold increase in business, Ratan says.

Founded in 2015 by Ratan and his twin brother Ankit Ratan — yes, their proprietary facial recognition technology can tell them apart — along with Ankur Pandey, Signzy works with the four largest banks in India and one of the top three acquiring banks in the United States, which allows them to service more than 70 customers globally.

A veteran of Mastercard’s Start Path startup engagement program, Signzy now partners with Mastercard to serve acquiring banks and payment facilitators globally, helping merchants accept electronic payments as quickly as possible while retaining the security protocols to protect the network and its users. Digitizing onboarding also reduces errors inherent in manual tasks while detecting fraudulent applications.

In partnership with Mastercard, Signzy’s Smart Onboarding solution is already live in India and is expected to roll out in several new markets across the globe over the next few months.

"The value that Signzy has brought to customers in India has been evidenced in the accelerated growth of new merchants, and we are excited about bringing them to other markets and partners across the globe," says Zahir Khoja, executive vice president, Merchant Solutions and Partnerships, Mastercard. "Small businesses no longer have to wait days or weeks to experience the power of the digital economy."