Every industry, especially the payments space, seems to have “AI” stamped on it. The question for operators and especially those running subscription businesses is, “what is the real value and impact?”
Recent headlines have questioned whether we’re in an “AI bubble” with many influencers noting that surging investment and marketing hype may be outpacing real-world impact. But payments are one sector where the results are tangible.
AI isn’t just out there promising value, but it is actually producing it in the payments space. The difference lies in the application. Instead of speculative use cases, payment innovators are using AI to detect fraud milliseconds faster, rescue legitimate transactions, and personalize billing flows that keep customers engaged.
Below is a field guide to where AI is already paying off across the payments industry and how to deploy it without buying into the hype.
1) Fraud detection that protects revenue and customer experience
Global card fraud continues to rise, and card-not-present (CNP) is the epicenter. Recent summaries of Nilson Report data put global card fraud losses at $33.83B in 2023, with CNP driving a large share, an arc that’s projected to keep climbing over the decade.
Modern fraud stacks use machine learning models to score risk in real time, evaluating hundreds of signals (device, velocity, behavioral biometrics, identity consortium data) and continuously retraining on new attack patterns. Industry surveys show merchants are actively evolving these stacks and partnerships to keep up with a fast-changing threat landscape.
Real value looks like lower false positives and keeping good customers in a low-friction flow
2) Authorization optimization
A common misconception is that fraud tools are the only place AI moves the needle. In recurring billing, your biggest upside is often authorization optimization and making sure legitimate, profitable transactions clear on the first try.
Tokenization is the quiet workhorse here. Visa reports that the expansion of tokenization has coincided with higher approval rates and lower fraud. For example, Visa cites a 6% improvement in approvals and ~30% reduction in fraud associated with tokenized transactions, alongside billions of tokens now issued globally. Tokens also refresh more gracefully when cards change, which matters enormously for renewals.
Next, AI-assisted routing. If you process at scale or across regions, then using multiple acquirers and letting an AI system route each attempt based on issuer preferences, BIN behavior, and historical outcomes can raise approvals and reduce costs. Industry reports predict payment orchestration layers will increasingly use AI to select the optimal path in real time rather than rely on static rules.
Finally, issuer-aware retries. Instead of hammering the same decline code every few hours, AI models can learn when a retry is likely to succeed (pay cycles, bank maintenance windows, soft vs. hard declines) and schedule attempts accordingly. This protects your brand while recovering legitimate revenue.
3) Chargeback reduction isn’t just fraud
Chargebacks don’t come only from stolen cards. Many originate from avoidable confusion such as unclear descriptors, billing surprises, or a support queue that’s slower than a cardholder’s bank app. AI can help on two fronts:
- Proactive communications: Tuned by predictive models, pre-renewal nudges, receipts that answer the top “reason codes” before they become disputes, and “is this you?” prompts when behavior looks risky but not definitively fraudulent.
- Friction-right checkout and account flows: AI-assisted copy testing and UX tweaks that reduce buyer’s remorse (and “I don’t recognize this” claims) without exploding the page.
4) Subscription-specific wins
In subscriptions, payment failures drive a distressing share of churn. The fix is a playbook that includes tokens and account updaters, issuer-aware retries, gentle dunning across channels, and clear, self-serve account controls so customers update payment details without opening a ticket.
AI can help by predicting which accounts are at risk of failed renewals next cycle or detecting when a customer is more likely to pause than cancel their subscription
Bottom line
Sure, there is hype in the market. But there’s also real value, especially for recurring billing businesses when you apply AI to the right problems and not every problem.
AI can help stop fraud without blocking customers, raising approvals with tokens and routing, and rescuing good renewals before they fail.
Treat AI as tool that is tested, measured, and continually tuned. If your dashboards start showing higher first-attempt approvals, fewer chargebacks, and quieter support queues, you’ll know you’ve moved beyond the buzzword and into better business.
