One of the biggest consumer aggravations in using payment cards is a little process that creates a huge bottleneck. The bottleneck is none other than the “Pending" charge.
Pending charges are essential in day-to-day finances, but can cause confusion. In short, consumers use their payment cards to pay for goods and services, banks authorize the transactions, and final settlement takes hours or even days on the back end.
When consumers check their card balance they notice pending charges but aren’t clear on whether this is their current balance or what funds are available to spend on their debit card. The struggle between authorization and final settlement has been a frustration for consumers for decades.
The main reason pending charges take so long is that clearing is done in batches rather than real time, leaving consumers with pending charges. For consumers, overdraft fees can be a shocker that happens when they misjudge how much their current balance actually is.
Visa recently introduced artificial intelligence (AI) into their pending charge workflow. Visa’s new development, leveraging AI is called Smarter Posting. Smarter Posting is a service that Visa uses to deliver a customized “score” for each transaction. This helps banks “score” the possibility that a transaction amount will remain the same when a consumer makes a payment to the time they see their account balance.The “score” through the Smarter Posting service is being rolled out globally and is helping banks post more accurate charges and day-to-day balances. In an effort to prevent overdraft charges and make consumers' lives easier, banks can offer the probability that the transaction will not differ from the amount charged to the consumer.
“Our clients, partners and cardholders look to us for actionable data-driven insights to better manage their businesses and financial lives, especially during these unprecedented times. Today we’re announcing a set of services that use AI to make it easier for consumers to manage their accounts, and for financial institutions to manage their business,” said Jack Forestell, executive vice president and chief product officer, Visa.“With our investment in AI infrastructure, we’re unlocking novel, real-time solutions to complex problems.
This is just the beginning of what we can do with the predictive power of AI.
”Earlier in 2020, Visa introduced SmarterSTP which leverages AI to help banks manage transaction authorizations when they are dealing with service disruptions. Since launch they have enrolled over 500 financial institutions and helped prevent more than 5 million potential payment declines over the past few years.
It will be interesting to see what the future holds with Visa’s investments in AI. There’s no doubt that Smarter Posting is solving massive consumer banking headaches by making transaction transparency especially useful for consumers using debit.