Digital payments company Visa has said it's leveraging AI to share consumer shopping preferences with merchants, which could enhance personalized shopping experiences.

The company plans to utilize its proprietary token service, which currently secures 29% of its transactions by removing sensitive cardholder information from the payment flow. Now, with consumer consent, it's planning to add personal data back into that flow, enabling merchants to access private data tokens containing AI-generated insights based on a consumer's past transactions on the Visa network, the company said.

Consumers will have the ability to review and revoke access to their data through their banking apps, ensuring transparency and control over their information, it said.

"As new data regulations create a guide for better consumer data privacy practices, and Gen AI transforms how we discover things online, Visa believes that payment data has a role to play in delivering these new and improved experiences," Visa said in the statement.

Customer incentives unclear

Analysts pointed out that this will benefit Visa and merchants, but it's not clear how they will encourage customers to share more information. This concern is particularly relevant because the success of this initiative will depend on customers' consent.

"I think this mainly benefits Visa and the retailers," said Pareekh Jain, CEO of Pareekh Consulting. "I don't see much in it for the consumers when it comes to data sharing. For Visa to work effectively, customers should give their consent, and for this, customers should be incentivized. They might get some cashback or other benefits, but that part is not clear at the moment."

Retailers are increasingly looking for information about customers to feed into generative AI models, and Jain pointed out that this could also lead to increased demand for the consumer information Visa collects.

 "Visa has a unique position since it holds all this data," Jain said. "However, they should also keep customer interests in mind."

Biometrics for better security

The announcement was made at the Visa Payments Forum in San Francisco, where the company unveiled a host of other products and solutions as well.

Significant among them was the Visa Payment Passkey Service, which uses biometrics such as facial recognition or fingerprints to confirm a consumer's identity and authorize online payments. Visa passkeys will eliminate the need for passwords or one-time codes for online shopping, enabling more streamlined and secure transactions, the company said.  

"There is a global desire to find commonality, interoperability, and simplicity for online payments," Visa's chief product and strategy officer Jack Forestell said in the statement. "Our passkeys, designed specifically for payments, represent a massive paradigm shift in our industry because it confirms identity without interrupting the checkout experience."

Jain commented that this service could be more beneficial to customers.

"If Visa could provide a facility where your identity works regardless of the payment system - be it debit, credit, or any other wallets - it would help consumers enhance their user experience," Jain said. "These days, there are so many payment options. Improving customer experience is crucial, and a unified Visa identity could simplify security and user authentication, eliminating the need for multiple logins."