Payments in 2025 #5 – AI in payments

The payments industry has a strong track record of using AI to help spot and stop fraud. Now, as they explore other opportunities to adopt AI into their business, payments firms must carefully consider the regulatory risks.

EU AI Act

The EU has set out its stall for regulating artificial intelligence. Its flagship AI Act will be phased in over the next few years.

One of the first requirements to take effect relates to AI literacy. AI providers and deployers need to do their best to ensure a sufficient level of AI literacy of their staff, taking into account how they use AI.

The other requirements that apply under the Act depend on the type of AI system in question. For example, high-risk use cases attract the most onerous obligations for AI deployers. There are also transparency rules for AI systems that interact with humans directly. Payments firms should consider how their current and planned roll-out of AI could fall in scope of the EU regime.

Resilient AI

Notwithstanding the introduction of AI-specific rules, payments firms should also apply the existing regulatory framework to their implementation of AI.

Front of mind should be the EU’s Digital Operational Resilience Act and corresponding rules in the UK. These regimes expect payments firms to have robust governance processes in place to manage ICT risks, especially where AI services are provided by third parties. These relationships will need to be mapped and may need reporting to regulators.

Customer outcomes

Firms should take particular care in relation to any use of AI that could impact customer outcomes. For example, firms may rely on AI to provide customer support or to help them decide when to delay suspicious payments. In these kinds of scenarios payments firms would need to ensure they continue meet their obligations under the FCA’s Consumer Duty in the UK and under current and future European payments regulation (PSD2 / PSD3).

Date for the diary: 2 February 2025 – EU AI Act literacy requirements apply

This is the final post in our series looking at the outlook for payments regulation in the EU and UK. Read our Payments Outlook 2025 for more.