In a time when AI scams are becoming more advanced every day, your digital ID is doing far more than simply logging you into apps and websites. Behind the scenes, stronger identity checks are helping businesses stop fraud before it happens, cutting an astonishing $34 billion in losses across the economy. What was once viewed as a basic security step has now become one of the most powerful tools in the fight against online crime. So how did digital ID systems turn into such a critical shield against AI-driven scams? Keep reading to learn how this shift in identity verification is reshaping the digital economy.
How AI scams are forcing a security revolution
The digital world has reached a tipping point where a simple password is no longer enough to prove you are who you say you are. As we move through 2026, the battle for your identity has evolved from basic hacking into a high-stakes arms race fueled by artificial intelligence and industrial-scale automation.
For many financial institutions, identity verification has historically been a “check the box” exercise. However, new research highlights that “good enough” security is costing the global economy a fortune. According to the PYMNTS Intelligence report, The Hidden Costs of ‘Good Enough’: Identity Verification in the Age of Bots and Agents”, which was produced in collaboration with Trulioo, 66% of firms reported that their current verification technologies produce inconsistent results. These performance gaps lead to an average 3% loss in annual revenue. Across the industry, these identity weaknesses translate to a staggering $34 billion in annual financial losses.
Criminals are no longer just stealing credit card numbers; they are using AI to build “Frankenstein” identities. By blending real data with fake information, they create synthetic identities that mimic legitimate human behavior at scale.
Data from a second PYMNTS Intelligence study commissioned by Block, Financial Scams Are the New Customer-Churn Crisis for Banks, reveals why these tactics are so effective. In 81% of successful scams, criminals impersonated a trusted source, such as a bank official, a friendly stranger, or a personal contact. Impersonating an authority figure (like a government agent) accounted for 55% of reported incidents.
Also, nearly two-thirds of victims authorized a fraudulent payment within 24 hours. As instant payment systems become the norm, the window to catch a scammer is shrinking to mere minutes.
Why new digital IDs are a game-changer
Identity verification has moved far beyond a routine legal requirement. It’s now the first line of defense against global financial losses. By shifting focus from traditional password theft to stronger digital IDs, companies can stop fraud before a transaction even begins. These modern IDs use real-time AI to instantly detect bots, impersonators, and synthetic identities, effectively plugging what researchers estimate is a $34 billion leak in the global economy.
Recent industry moves show how companies are embedding identity verification deeper into payment systems. Visa, for example, partnered with Proof to strengthen digital ID checks on high-value and high-risk transactions. “The only way to fight bad AI is with even better AI,” said Michael Jabbara, senior vice president and head of payment ecosystem risk and control at Visa, speaking to PYMNTS.
Other companies are following suit. Bolt’s adoption of Socure integrates predictive risk signals and an Identity Graph to distinguish legitimate customers from manipulated or synthetic identities at checkout. Even tech giants like Google are getting involved, partnering with Entrust to bring large-scale infrastructure to identity verification.
The results are showing promise. According to PYMNTS Intelligence, nearly 94% of global users of identity platforms report that “know your customer” and “know your business” processes have become easier over time. Recovery experiences also matter: 90% of consumers who regained most or all of their losses said they now trust their institutions to prevent future scams.
These trends indicate that identity verification is no longer an isolated step. It has become a core layer of defense, connecting fraud prevention, payment security, and customer experience. As instant payments rise and AI-enabled scams grow more sophisticated, strong digital IDs are proving to be a persistent, transaction-level shield for both businesses and consumers.
Source: PYMNTS