- Key insight: The central bank is embracing the integration of artificial intelligence into payments systems and contemplating rules to address newfound uncertainties and vulnerabilities.
- Expert quote: "Meeting this moment requires a proactive approach that balances innovation with the safety, integrity, and stability that underpin trust in payments." — Federal Reserve Gov. Christopher Waller
- Forward Look: Waller said the rise of AI in payments could necessitate new regulations, but noted that it could also to "test and refine new approaches."
Artificial intelligence is transforming the global payment system as we know it, according to one of the Federal Reserve's longest-tenured policymakers.
In a speech delivered Tuesday afternoon in Miami, Fed Gov. Christopher Waller described how AI technology could be used to make cross-border payments safer and more efficient. He also detailed the transformative potential of agentic AI in various payments activities.
Waller, who oversees the central bank's payments operations on behalf of the Fed's Board of Governors, said the rise of innovations backed by large language models, or LLMs, and their growing autonomy are promising developments, albeit ones that will require new policies and practices.
"Agentic transactions could materially change the frequency and timing of payments, as well as other characteristics," Waller said. "Meeting this moment requires a proactive approach that balances innovation with the safety, integrity, and stability that underpin trust in payments."
Wallers delivered his remarks at Sibos 2026, a payments conference hosted by the Society for Worldwide Interbank Financial Telecommunication, or SWIFT.
On the topic of cross-border transactions, Waller said the technology could be used to curtail illicit finance, noting that LLMs have "contextual awareness" that can improve sanctions screening and anti-money laundering systems. He said these AI systems can improve how illegal payments are stopped while also limiting the number of permissible transactions that are stopped erroneously.
"Research has demonstrated that they can significantly reduce false-positive alerts for illicit activity," he said. "This frees up resources to examine more complex, high-risk cases and allows legitimate transactions to proceed with less friction."
One area in which AI could create more issues for payments systems is on the cybersecurity front. Waller said concerns that the technology could increase both the volume and sophistication of cyber attacks are "well founded."
Wallers added that while AI could also be used by payments systems to ward off such attacks, he said the competitive balance skews in favor of bad attackers rather than defenders.
"Threat actors need to exploit only one key vulnerability, whereas payment system operators and service providers need to defend a large attack surface," he said. "That asymmetry is precisely why the industry must move deliberately to leverage AI in strengthening the safety of our trusted payment systems."
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Still, Waller said, there are many technical advantages that payments systems stand to gain by leaning into AI technology. He highlighted the fact that the process of payment routing relies on finding the path that "best balances cost, speed and reliability. International transactions also must account for currency conversion and liquidity mechanisms.
"If presented with the right data and criteria, AI agents have the potential to excel at solving these complex optimization problems, helping to improve the efficiency of crossborder payments," he said.
Along with devising rules and systems for handling cross-border transactions conducted through traditional counterparties, Waller said the industry and its overseers must contend with new types of payment activities: those carried out by AI agents.
Waller said these could take a host of forms, including retail transactions initiated either by consumers or on their behalf by authorized AI agents, as well as business-to-business transactions. Certain tasks could even require "machine-to-machine" micropayments incurred as AI agents need to query certain online databases.
Waller said these activities could greatly improve productivity, but come with a host of issues to overcome related to authentication, liability and fraud.
"Agentic commerce transforms the payment authentication paradigm," he said. "The question shifts from proving that a buyer is an authorized payer to proving that an agent has the authority to pay on the buyer's behalf. Capturing this will require new authentication approaches."
Waller did not endorse any specific regulatory or supervisory changes related to these new AI-backed systems. Instead, he said existing frameworks — such as those related to e-commerce liability — could be adapted to be fit for purpose.
"But there may also be an opportunity to test and refine new approaches," he said.
