Leveraging AI and Machine Learning for Enhancing Secure Payment Processing: A Study on Generative AI Applications in Real-Time Fraud Detection and Prevention

Abstract

This study aims to identify how secure payment processing using generative artificial intelligence (AI) can enhance real-time fraud detection and prevention. AI-based machine learning models, as well as generative AI applications, are proven to provide the possible solutions to enhance secure payments by detecting and preventing the fraudulent transactions in real-time.
In traditional systems, mostly rule-based or supervised learning models are used that cannot provide real-time fraud detection. The advanced AI models recently became hot-topics and focus significantly advanced research into unsupervised and generative models. This research study focuses on the particular unsupervised models, as well as generative model applications, to analyze their potential performance. The importance and the performance of secure payment processing in real-time fraud detection and prevention are analyzed with the traditional and generative AI solutions. The findings are described and their results presented in this context.
In the past, rule-based systems have been designed to detect the deviation from the expected patterns and alert the merchant or card user. Over the years, the use of statistical and artificial intelligence-based machine learning (ML) systems has become prevalent, allowing for more sophisticated modeling of real-time credit card transactions. Despite these advances, fraudsters constantly disrupted the peace and forced them to explore new ways to commit fraud. Current research analyzes current trends and advanced artificial intelligence models that maintain and improve performance in identifying fraudulent activities. The financial industry provides economic value to members of society by ensuring safe and secure transactions between them. The invention of the smart card revolutionized the payment system by enabling electronic clear, quick, and paperless transactions. However, it also opened a new era of electronic fraud.