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Beyond QR Codes. Enhance Fintech Security with GenAI

QR Codes | Jul 3, 2024

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Generative AI Visual Inputs as a Secure Alternative to QR Codes

The swift adoption of QR codes for contactless payments across the globe has brought to light security concerns, such as malware dissemination, phishing, and data theft. As smartphone technology and artificial intelligence (AI) continue to progress, generative AI visual inputs—which offer improved security and a seamless user experience—present a viable replacement for QR codes.

The Rise of QR Codes in Fintech

QR codes have transformed fintech by providing a simple, cost-effective way to facilitate transactions. Their popularity skyrocketed during the COVID-19 outbreak, as companies and customers sought contactless payment options to avoid direct touch. The QR code payment market is expected to expand from USD 11.2 billion in 2022 to USD 51.58 billion by 2032, owing to its convenience and the trend towards cashless transactions. Major regions like China, India, and the US have seen tremendous adoption, with platforms like Alipay, WeChat Pay, Revolut, and PayPal leading the way.

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Despite their benefits, QR codes pose several security risks that can compromise user data and trust:

  • Malicious phishing attacks using QR codes can lead visitors to bogus websites that steal personal information.
  • Scanning a hacked QR code might result in data theft and illegal access to sensitive information.
  • QR codes can be used to launch downloads and install malicious software on the user's device.

Popular Non-QR Code Payment Solutions that Improve Security

To improve security and prevent fraud in fintech, various alternatives to QR codes use modern technologies to provide more safe and dependable payment solutions.

  • Biometric authentication uses unique biological traits such as fingerprints, facial recognition, or iris scans to verify users. Biometric data is difficult to copy, which increases security and reduces the danger of unwanted access. Apple's Face ID and Touch ID are commonly utilized in mobile payment systems. See: Amazon's Pay by Palm.  Although see:  India Biometric Data Breach Highlights Cybersecurity Risks.
  • Near Field Communication (NFC) --> Enables devices to communicate when they are close together; often used in contactless payment systems. NFC transactions are encrypted and frequently require extra authentication (such as a PIN or biometric verification). Google Pay and Apple Pay employ NFC technology to provide secure contactless payments.
  • Tokenization --> replaces sensitive payment information with unique tokens that cannot be used outside of the transaction. Even if intercepted, tokens are worthless outside their original context, dramatically lowering the risk of data breaches. Many payment processors, such as Visa and MasterCard, use tokenization for online transactions.

See:  Tokenisation - The New Rails of Finance

  • Dynamic Card Verification Value (CVV) --> Unlike typical credit cards, which use a static CVV, dynamic CVV uses a changing CVV code for each transaction. Reduces the possibility of card-not-present (CNP) fraud because the dynamic CVV is only valid for a limited time. Some banks and credit card firms have begun to issue cards with dynamic CVV technology.
  • Invisible payments and voice recognition --> Transactions can be completed without the requirement for physical interaction, typically by voice commands or automatic detection. Reduces the risk of physical card skimming by utilizing voice biometrics for safe authentication. Amazon Go stores accept invisible payments, and Google Assistant and Amazon Alexa use speech recognition for transactions. See:  The Necessity of Copyrighting Your Voice in 2024
  • Artificial Intelligence and Machine Learning --> Utilizes AI and ML algorithms to detect and prevent fraudulent activities by analyzing transaction patterns and user behavior. Can identify anomalies in real-time, providing advanced fraud detection and prevention. Fintech companies like Stripe and PayPal use AI-driven systems to monitor and secure transactions.  See:  PayPal Ventures Co-Leads $30 Million in AI Pioneer Rasa

Generative AI for Fintech Payments

How about using generative AI visual inputs instead of QR codes for secure transactional payments using AI and smartphone technology? Here's how it could work and what the possible benefits are.

  • Use Visual Recognition and Contextual Understanding

Generative AI can analyze visual content such as advertisements, posters, and product packaging. This AI can understand and interpret text, logos, images, and other elements to provide relevant information and actions. When a user points their smartphone camera at an advertisement, the AI can recognize the brand, extract key information, and display interactive options.

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For example, it can identify a fast food advertisement and show nearby outlets, current promotions, or even allow direct ordering. Google Lens is already a step in this direction, enabling users to identify objects, translate text, and find product information by simply pointing their camera at an item​.  This functionality streamlines the user experience and mitigates the risk of malicious QR codes.

  • Enhance with Augmented Reality (AR) Overlays

Artificial intelligence-powered augmented reality can overlay digital information on actual locations, improving the user experience. In a retail context, AI may overlay product details, reviews, and buy alternatives onto objects while the consumer looks at them through their smartphone camera. This lowers the necessity for physical interaction while improving security. IKEA's AR software enables consumers to visualize furniture in their house, enhancing the buying experience.

  • Security and Fraud Protection

AI can provide an additional degree of protection by evaluating the validity of visual content and ensuring that the information presented is accurate and safe.

See:  How GenAI Is Transforming Risk and Compliance in Banking

AI algorithms can cross-check visual inputs against known databases to prevent phishing and fraudulent activity, making them a more secure alternative to QR codes, which are easily tampered with.

Conclusion

The popular usage of QR codes in fintech has undeniably changed the way we do transactions, but their security flaws must be addressed. Generative AI visual inputs are an appealing option that improves security and provides a more intuitive user interface. As AI technology advances, its incorporation into fintech will most certainly pave the way for safer, more efficient payment solutions.


NCFA Jan 2018 resize - Beyond QR Codes.  Enhance Fintech Security with GenAIThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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