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Visa's (V) Smarter STIP to Make Payment Processing Better


In a bid to provide better services to financial institutions, Visa Inc. V will be providing Smarter Stand-in Processing (STIP), a new solution that uses real-time artificial intelligence (AI). This enhanced service will help financial institutions manage transaction authorizations when disruptions occur.

The Smarter STIP will use deep learning to study the past transaction. Based on the same, the technology will provide informed decisions to issuers whether to approve or decline transactions when their systems go offline.

This innovation will provide a better payment experience for issuers as well as customers by minimizing payment failure or blockage due to technological breakdown in the system.

The new service, which will be available in October 2020, already generated a lot of buzz from a several financial institutions around the world.

This breakthrough will minimize the downtime, which may occur either on scheduled maintenance or due to an unexpected outage. Frequent system crash and out-of-order devices can hamper the smooth functioning of financial institutions, hurting their customers’ interest in the event. Failed transactions can result in revenue loss and poor cardholder experience besides damaging the company’s reputation and even inviting scrutiny from regulators.

Smarter STIP is aimed at tackling these sticky situations and providing a seamless payment experience even when there are network connectivity glitches.

Visa’s new Smarter STIP service builds on its existing STIP capability with the addition of AI, which is smarter, stronger and more dynamic.

Uninterrupted services are most sought after these days because of the lightning speed with which customers prefer to get  serviced.. Sudden power cuts or even schedule maintenance work causing an interruption of services is not acceptable to customers.

Visa proved its mettle in keeping customers and issuers at the forefront by rolling out this technology, which provides unique insights into the cardholder’s past purchasing behavior, rather than solely depending on static rules applied across an entire card portfolio. Thus, the decision provided by the Smarter STIP almost tallies with an issuer’s own decision making. This near-perfect approach looks promising enough to reduce transaction declines for cardholders by up to 50% in some cases.

Visa has been able to stay in the front line within the rapidly changing payments industry via its operational efficiency. The company invests heavily at a steady pace in optimizing its core infrastructure. This includes a scalable, high-performing, GPU-based platform, designed to support the speedy deployment of deep learning capabilities.

The stock has gained 11.9% compared with its industry’s growth of 7.4%.

Other players in the same space, namely Mastercard Inc. MA has gained 17.6% while American Express Co. AXP and Discover Financial Services DFS have lost 20.9% and 39.2%, respectively.

Visa currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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