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How Visa Is Using AI-Powered Services to Solve Complex Payment Problems

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In recent times, financial systems have witnessed immense transformation and improvement as cutting-edge technologies, like AI, are being intertwined with financial services to improve the quality of services that are provided by financial institutions. 

Payment technology giant, Visa, recently launched a suite of AI-powered services—VisaNet+AI— to address payment challenges that banks, merchants and consumers face. VisaNet+AI features new innovative and value-enriched services, including Visa Smarter Posting, Visa Smarter Settlement Forecast, and Visa Smarter Stand-In ProcessingThe (STIP). 

Before the introduction of VisaNet+AI, Visa has been a key player in terms of integrating AI features into financial services, with previously existing AI-powered services like its sophisticated AI-powered credit application fraud prevention tool. However, VisaNet+AI stretches beyond the previous capabilities of Visa’s AI-driven services.

Visa Smarter Posting

The Visa Smarter Posting service helps to reduce the lag that occurs during customer transactions when payments take long to finalize. The

Smarter Posting service dynamically updates the account balance of customers, thereby, providing real-time visibility of funds. This service is very useful in cases where the account balance of customers change between the checkout and a customer’s statement balance, for example, when a cross border payment involving multiple currencies is made. The Visa Smarter Posting service will help to prevent overdrafts or negative balances that occur when funds are yet to be settled in the bank account, enabling a dynamic synchronization of bank balances. In cases like this where transactions are yet to be settled or finalized, the service will effect a provisional update of the customer’s account balance so that customers can know how much exactly they have left and enjoy a seamless payment experience.

The Smarter Posting service uses AI to provide a customized score for each transaction during the authorization process. The Smarter Posting model predicts the likelihood that a transaction amount will be consistent through the clearing process, based on an analysis of historical data.  The model achieved an accuracy of 98% when tested to predict whether a transaction amount will remain consistent.

The Smarter Posting service will be available in Europe by April 2021 before expanding to other regions.

Visa Smarter Settlement Forecast

The Smarter Settlement Forecast service provides a solution to the challenge that financial institutions face in predicting the volume of cash that will be needed to meet the settlement volume of each day. The service provides a customized 7-day forecast of the amount that clients will need each day for payment settlements. 

Using data on historical settlement volumes, major trends, seasonal indicators like festive seasons, outlier events like in the case of Covid-19, and real-time transaction data, the Smarter Settlement Forecast is able to provide quality predictions of cash flow needed by clients each day. 

Visa Smarter Stand-In Processing(STIP)

Visa Smarter STIP, the first of the VisaNet+AI services, was announced in August 2020. The Smarter STIP harnesses the power of deep learning to assist financial institutions in the authorization of transactions during outages. 

Smarter STIP is capable of generating well informed decisions to facilitate the approval or decline of transactions on behalf of issuers. This provides customers with a seamless payment experience with Visa. 

With VisaNet+AI, the Visa team is just beginning the journey of developing innovative AI-powered solutions to payment challenges. In the words of Jack Forestell, executive vice president and chief product officer, Visa, on behalf of the Visa team, “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.”

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Jack Dorsey‘s Square to develop open source Bitcoin mining

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Jack Dorsey Bitcoin

On Friday, October 15, Twitter CEO Jack Dorsey announced that American fintech company, Square, would be looking to get into Bitcoin mining. Jack Dorsey who is also Square’s CEO announced this on Twitter which subsequently sent waves through the bitcoin market, surging its price to almost a record high, rising over $62,000 over the weekend. According to the Twitter boss, Square is looking to building an open source Bitcoin mining system that would be available to individuals and businesses.

Sharing his thoughts further on the initiative, he stated that “Mining needs to be more distributed” and that “the more decentralized [mining] is, the more resilient the Bitcoin network becomes. He also mentioned the apparent inaccessibility of mining stating that “Bitcoin mining should be as easy as plugging a rig into a power source.

Dorsey also believes that bitcoin mining “needs to be more efficient and that “clean and efficient energy use” would be undoubtedly beneficial to the digital currency in the long run.

Dorsey ended the thread by saying that a “technical investigation would be undertaken by a Square team led by Jesse Dorogusker, Square’s hardware lead. If successful, this initiative would be another of Square’s bitcoin focused projects which includes a Bitcoin hardware wallet.

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Financial Leaders from G7 Release Guidelines for Central Bank Digital Currency

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Source: World Atlas

At a meeting that was held in Washington, yesterday, October 13, G7 leaders discussed central bank digital currency and endorsed 13 public policy principles with regards to their implementation. The financial leaders from G7 agreed that CBDCs would complement cash and should not be detrimental to the monetary system. The G7 leaders have been discussing CBDCs this week concluding that they should do no harm and meet rigorous standards.

It should be noted that G7 includes finance leaders in advanced economic nations comprising of Canada, France, Germany, Italy, Japan, the U.S and the U.K. the G7 leaders make it mandatory that any newly launched CBDC should not harm the central bank’s ability to perform its duty of maintaining financial stability. In a joint statement by the G7 finance ministers and central bankers, they said that, 

“Strong international coordination and cooperation on these issues help to ensure that public and private sector innovation will deliver domestic and cross-border benefits while being safe for users and the wider financial system.” 

The joint statement further states that CBDCs are complements to cash and could serve as a liquid or safe settlement assets with an added advantage of anchoring existing payment systems. CBDCs issuance should be entrenched in a long-standing public commitment to transparency, rule of law, and sound economic governance. The statement added at CBDCs must be so efficient that they are fully interoperable on a cross-border basis. 

The G7 leaders agreed that they had a duty to minimize the incidence of ‘harmful spillovers to the international monetary and financial system” 

The G7 statement reiterated a similar statement earlier made by G20 that no global stablecoin project should begin operation until such a token has addressed legal, regulatory and oversight requirements. 

Countries like China and Nigeria are ahead of the pack with regards to the adoption of digital Yuan and Naira respectively. China’s crackdown on cryptocurrency may be a step forward for the country’s plan to promote its digital Yuan. Nigeria, on the other hand, postponed the launch of its eNaira in deference to the 61st anniversary of Nigerian independence on Oct 1. 

However, countries like the US and the UK are dragging their foot with regards to the introduction of CBDCs to their financial system. There are insinuations that America is in danger of being left behind technologically and financially if it doesn’t get serious with the implementation of CBDC in its financial system.

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Learning Guides

Understanding Speculation and Crypto Volatility

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Everyone who dabbles in the crypto industry learns almost immediately that the market is very volatile and oftentimes things can change very quickly. That volatility is the fundamental reason why some investors make absolutely stunning gains in so short a time and others lose a lot of money as well. Trading in crypto is one of the riskiest ventures any person can undertake and as they say, it’s not for the faint of heart. The risks can be mitigated of course and sometimes depends specifically on the coin or crypto asset being traded on, barring general market trends.

Nevertheless, to get to the bottom of the volatility concept, one must understand speculation in the market. To start off, the concept of speculation isn’t limited to cryptocurrencies, on the contrary, speculation has existed for as long as economics and trading has. But it is worth saying that speculation is often a feature of novel sectors, assets, commodities and the like. So, even though cryptocurrencies have been around for more than a decade, they’re still in their infancy as far as markets go. One could say that the market is still trying to find its feet.

One of the fundamental reasons why cryptocurrencies are so volatile is that they are fundamentally backed by nothing of value outside the attention that they get. Unlike many fiat currencies which are either pegged to another currency’s value or whose value is unilaterally determined by a central authority, cryptocurrencies only derive value as a function of how many people are willing to use is to transact, i.e. trust in the asset because other people trust it. As a rule of thumb, the larger the number of people who accept the asset, the more valuable it becomes.

This is one of the hallmarks of speculative trading. In the crypto world or in any market that’s novel and untested, many people are in it to win it which means their strategies in trade has the objective of making as much profits as possible in the short term. Therefore, the market enters a subtly dangerous cycle of rapidly changing prices of assets. Basically, investors typically buy assets when prices are low and wait. As more investors are attracted to the commodity for its low prices, it sets off a cascade where more people buy in, causing the price to steadily rise. 

However, all good things must come to an end and it almost always gets to a breaking point whereupon the price gets high enough for investors to begin to sell. This reverses the earlier cascade and as more and more investors pull out, the prices can fall dramatically causing even more to sell off in fear of losing whatever investments they have left. The prices having fallen resets the game and primes investors to begin buying again.

Volatility has been one of the talking points of many critics of cryptocurrencies often comparing it to a Ponzi scheme. And in certain cases, persons of interest with large pulls and audiences can substantially affect the rate at which prices rise and fall. Other factors include government regulations. Volatility at its core reflects the often chaotic nature of trade and market interactions and human hopes and fears.

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