The Role of AI in Fraud Detection in Digital Payments Sector

The expansion of digital payment systems has significantly changed how people carry out financial transactions, making them faster, easier, and more accessible than ever before. At the same time, this shift has brought an increase in fraudulent activities, creating serious concerns for both users and financial institutions. This study focuses on understanding how effective AI is in this role, while also examining how it influences user trust, confidence, and concerns related to data privacy. A quantitative research approach was used for this study, with primary data collected from 148 respondents through a structured questionnaire. The data was analyzed using Jamovi, applying statistical techniques such as frequency analysis, descriptive statistics, chi-square tests, correlation, reliability analysis, and ANOVA. The results indicate that although most users are aware of AI in fraud detection and show a moderate level of confidence in its performance, their level of trust is comparatively lower. The findings also suggest that when users perceive AI as effective, their trust in it tends to increase. However, confidence alone does not necessarily lead to higher trust, highlighting a more nuanced relationship between these factors. Furthermore, demographic variables play a role, with gender showing a significant influence on users’ comfort levels, while age does not appear to have a meaningful impact on trust. In conclusion, while AI holds strong potential to enhance fraud detection and improve the security of digital payment systems, gaining user trust and addressing privacy concerns remain essential for its wider adoption.