Visa Adopts AI in the form of Smarter Stand-in Processing
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Visa Adopts AI in the form of Smarter Stand-in Processing

Visa Adopts AI in the form of Smarter Stand-in Processing

On August 26, 2020, American Payment major Visa Inc. announced Smarter Stand-in Processing (Smarter STIP), a new capability that uses real-time artificial intelligence (AI) to help financial institutions manage transaction authorizations when service disruptions occur. Using deep learning to analyze past transactions, Smarter STIP generates informed decisions to approve or decline transactions on behalf of issuers in the event that their systems go offline. Visa pioneered the use of AI and neural networks to prevent fraud—Smarter STIP builds on that track record and is the first in a suite of new AI-powered innovations coming to VisaNet, Visa's global processing network.

"Consumers expect instant and uninterrupted access to their funds—failure to meet that expectation can be costly," says Jack Forestell, executive vice president and chief product officer, Visa. "Stand-in processing has always been a vital assurance to our clients that when the unexpected occurs, we've got their back. By adding AI, that capability becomes smarter, stronger, and more dynamic."

Addressing the challenge of downtime

Whether it's scheduled maintenance or an unexpected outage, service downtime is disruptive for financial institutions and their customers. When stand-in processing is not in place, the potential impacts can be profound: lost revenue due to failed transactions, poor cardholder experience resulting in call volume spikes to customer service centers, damage to reputation, and even scrutiny from regulators.

Visa's new Smarter STIP service builds on Visa's existing STIP capability by using deep learning to analyze past transactions down to the cardholder level. Thus the transaction decision that Smarter STIP provides is based on unique insights derived from the cardholder's past purchasing behavior, rather than solely on static rules applied across an entire card portfolio. With this added intelligence, Visa is able to provide a transaction decision on the issuer's behalf that more closely mirrors the issuer's own decision-making process—with the potential to decrease transaction declines for cardholders by up to 50% in some cases.[1]

Harnessing AI for the Payments Ecosystem

Visa Smarter STIP is one of several new real-time deep learning capabilities designed to solve long-standing challenges and pain points for buyers, sellers, and financial institutions.

These enhanced services are made possible by the investments Visa has made to optimize its core infrastructure. This includes a scalable, high-performing, GPU-based platform designed to support the rapid deployment of deep learning capabilities.  

"AI is one of the most transformative technologies of our time, giving us the power to build data-driven products that deliver new levels of insight and personalization. With one of the largest and richest data sets in the world, Visa is extremely well-positioned to unlock the full potential of AI for our clients and cardholders, and at massive scale," says Rajat Taneja, president of technology at Visa. "We've made significant investments in our infrastructure, making it possible to harness this data more deeply across all facets of VisaNet. Our data, combined with low-latency architecture and our unique modeling capabilities, make our technology platform among the most powerful for AI."

Global adoption already underway

Smarter STIP will be available in October 2020 and has generated interest from a range of financial institutions around the world.

"At UBS, we believe in building a better future for our customers by harnessing the power of innovation and collaboration—a continuous process that relies on innovative thinking and transformative technologies and capabilities, developed both in-house and by our partners," says Stefan Uebelhart, Head of UBS Card Centre. "We are very pleased to launch Visa's Smarter STIP service, as this is an example where the power of collaboration, transformative technologies, and innovation come together to provide an improved experience for our cardholders. In our quest to build a better future for our customers, we see Visa as a valued partner and intend to work together in the innovation space."

"As a leader in interest-free shopping platforms in Australia and New Zealand, Latitude Financial is constantly exploring new technology and innovation so we can deliver the best possible service to our customers," said Latitude's Chief Commercial Officer, Paul Varro. "Visa's Smarter STIP service helps us substantially improve transaction approval rates. This is a great outcome, cleverly bringing together AI with our historical authorization learnings, new datasets, and Visa's experience in transaction processing to provide rich customer experience, all the time."

About Smarter STIP

Visa created the Smarter STIP capability to address a key pain point for issuers and issuer processors: the suboptimal experience for cardholders during service disruptions. Visa's novel approach to stand-in processing, recognized through a US Patent in 2019, improves on the existing STIP capability through real-time evaluation of cardholder-level features. The model relies on:

  • Multiple recurrent neural network layers with millions of parameters.
  • Billions of historical records to train the model, resulting in an average 95% accuracy in emulating an issuer's likely decision in Visa's sample tests [2].
  • Continuous learning from the real-time transaction and outage data, allowing the service to adapt and improve as an Issuers' behavior changes over time.

Visa Smarter STIP does not require any technical change for clients to participate. Issuers connected to Visa DPS will be enabled for Smarter STIP when the service launches globally in October 2020.


[1] Based on Visa's internal analysis comparing existing and Smarter STIP approval rates of all transactions in Q1 CY2020 for a single US Issuer.

[2] This number was measured by Visa's internal simulation of the Smarter STIP model offline on transactions for all Visa BINs globally in Q4 2019. On average, the Smarter STIP model made the same approve/decline decision as to the issuers 95% of the time, for transactions across all regions.

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