We’re using AI to reduce transaction failures and improve fraud detection: Phi Commerce CTO

Pune-based fintech company Phi Commerce, which offers a unified omnichannel digital payments platform for enterprises, plans to expand both in India and internationally. Founded in 2015 to address cash-on-delivery challenges, the company has since shifted focus to solving issues for lenders. It recently launched CollectiPhi-360, a platform designed to simplify payment collections for lenders, across multiple payment channels and obtained certification from the National Payment Corporation of India (NPCI) to provide Unified Payments Interface (UPI) Switch for its enterprise customers. In an interview with TechCircle, chief technology officer (CTO) Ramkumar Subbaraj highlights how the company uses artificial intelligence (AI) and other digital technologies to enhance operations and its global expansion plans, particularly in East and Southeast Asia and the Middle East. Edited excerpts.

Digital payments, led by UPI, are on the rise. What are the emerging trends in the payment tech space today?

I believe a substantial amount of innovation and investments will be routed to AI-related projects in India to leverage and enhance security and user experience in digital payment systems. As we are incrementally talking about jacking up cross-border payments in India by tying up with international gateways, AI-powered fraud detection systems that enable real-time transaction monitoring, identifying and mitigating suspicious activities will take centre stage. Also, AI can play a major role in simplifying regulatory compliance by automating checks to ensure transactions meet local and international regulations.

Another transformational development in the Indian digital payments landscape is biometric payments. The Reserve Bank of India's move to allow non-OTP (One Time Password) methods, such as biometric authentication for payments, opens the door to several innovations in this space including face-based payment systems. Facial recognition offers a seamless and secure alternative to traditional methods, enhancing user experience, especially in regions with inconsistent mobile connectivity.

How does AI play a role in your backend processes and how does it help streamline operations?

We leverage AI and data analytics, in our business, to help transform various backend payment processes by making them more efficient and secure. It helps identify risks early, reduces transaction failures, and improves fraud detection. AI algorithms also streamline operations to handle large volumes of payments smoothly, ensuring a seamless experience for both businesses and customers. By enhancing reliability and enabling faster problem-solving, AI plays a key role in driving growth and customer satisfaction in the payments ecosystem.

With the rise in digital payments, digital frauds are also rising alarmingly, what are the key safeguards or new developments on this cybersecurity front to address this issue?

Companies are increasingly using AI and money laundering algorithms to detect anomalies in real-time, flagging suspicious transactions based on patterns or behaviours. We should also monitor user behaviours like typing speed, mouse movements, or touch gestures to identify unauthorised access. We should also invest in transaction monitoring systems that analyse transactions for red flags, such as unusual locations, devices, amounts etc. Tokenisation is a critical product to tackle fraud by replacing sensitive data with unique tokens to protect cardholder details. Also, users should ensure enough protection layers that require users to verify their identity through multiple layers that can include passwords, OTPs, biometric scans etc. Using fingerprint or facial recognition for high-value transactions should be made a mandatory element to avoid these frauds.

We are seeing a spurt in embedded finance applications and how does that impact customers?

A customer shopping on an e-commerce platform like Flipkart or Amazon can use embedded UPI or a digital wallet to pay instantly without redirecting to another app. Embedded finance integrates financial services into non-financial platforms, creating seamless, efficient experiences for customers. We are seeing exponential growth in this feature with a transformational effect for regular customers by embedding banking, payments, lending, and insurance within applications they use and services they already use.

Could you elaborate on your expansion plans in the enterprise technology space?

We have ambitious plans to expand both in India and abroad in the payment aggregation and payment gateway business as well as our technology stack offerings. We operate in the enterprise technology space, providing tailor-made payment solutions for industries like government departments, banking, financial services and insurance (BFSI), retail, e-commerce, education, healthcare, utilities and many more. This year we plan to expand our operations to international markets, mostly in South East Asia and the Middle East and talks are progressing with several gateway providers in these markets to emulate the success we had in the domestic market. We have also been certified by the NPCI to offer UPI Switch to our enterprise customers and this will also help us expand to the international market.