Generative AI Cuts Fraud Costs as Merchants Strengthen Payment Defenses

Generative AI can produce fake identity documents, deepfake faces and cloned voices at scale, turning fraud that once required specialized equipment and expertise into a low-cost, automated operation. Adam Hiatt, vice president of fraud and risk strategy at open payments platform Spreedly, said traditional identity, biometric and behavioral signals could all be forged, setting off a new arms race in the payments industry.

PYMNTS reported on March 20, 2026, that merchants were layering IP risk scoring, VPN and bot detection, device fingerprinting, location data and behavioral analysis to avoid relying on a single form of verification. As AI assistants and third-party platforms become involved in transactions, Spreedly advocates using tokenization instead of transmitting raw payment data. The report did not disclose fraud losses or spending on defensive measures.