Heading into the New Year (in a few weeks), the payments industry is ready for a wave of transformation & innovation — fueled by tech advancements, regulatory changes, and record-high demand from consumers and businesses.

Global competition shows no signs of waning in 2025.

Users will continue to experiment with the latest solutions to achieve a best-in-class experience.

For the companies & financial institutions facilitating money movement, the pressure remains to quickly evolve with new payment rails, infrastructure, and policies — or, risk losing ground to nimble newcomers and their innovative offerings.

In this deep dive, we share a guide for industry insiders, product leaders, and bankers discussing (TL;DR):

• The critical themes/drivers that connect this new landscape of payments;

• The top trends to watch in 2025, why they matter, and trigger(s) for impact/growth;

• Macro factors that can delay or hasten the pace of payments innovation next year;

Key Drivers for Payments Innovation: Speed, Ease of Use, and Security

Before diving into the specific trends, it’s essential to highlight what themes stand out for industry growth.

Picture a triangle, with each point representing a critical value driver for modernizing payments. At the top, we have Speed — below, an equal emphasis on Convenience AND Security.

As technology and digital experiences continue improving, so must the speed of money movement. The clearest example is with retail and eCommerce — a merchant selling a product to an end-consumer.

The authorization, settlement, and posting of a purchase transaction must be relatively quick as the individual wants to walk away with the new product. Today’s industry norm is through a card swipe (with a virtual / physical card) in a store or online (through a website / app). The actual checkout request (all customer & payment details submitted) only takes a few seconds for an approval/decline. Besides the high fees to merchants (1% -3% of the total sale), the desired speed is optimal.

How about for non-retail transacting such as business or cross-border payments?

It’s a different story as legacy infrastructure and rails still offer the main mode of transport.

International wire transfers via the SWIFT network are in use (after 30+ years of existence) and involve multiple intermediaries between sending & receiving bank. Regardless of amount, transfers can take up to 5 business days (based on the destination country) and are difficult to track if the request is lost in transit.

This is where modern payments comes in — demand is high (especially with business-to-business, aka B2B transfers) for improvement. Even though the discussion has centered on speed, convenience and security are additional considerations that must be present.

Stablecoins offer a new, low-cost alternative for business & international money movement, but can be difficult to find mainstream, compliant offerings. There’s also uncertainty when it comes to security (and who’s liable if there’s an issue).

The payment trends that gained momentum this year (and are poised to takeoff in 2025) capture this ‘tri-force’ dynamic in a seamless, innovative manner.

The Payments Trends to Watch for in 2025

The broader FinTech sector may be slow to pick back up — not the case for payments.

On a global scale, there are efforts to improve the technical access to a variety of payment systems, usher in the next level of real-time transfers, leverage blockchain & AI for enhanced convenience & security, and expand regulatory infrastructure.

The desired outcome —> more sustainability AND ‘embeddability’ of rapid, low-cost payments in 2025.

Let’s dive into the trends and highlight key trigger points.

Composable Payment Architecture leads the way to Modernization

Composable payment platforms leverage modular APIs (application programming interfaces — think of preset ‘lego’ pieces you can maneuver) for flexible AND scalable payment schemes, all within a cloud-based system.

The ability to build, customize, modify, and launch an efficient funds flow is available to companies of every size and every vertical — no need to build from scratch or have prior payments experience.

Why does this matter for 2025? Customized payment solutions seem more cumbersome than before, due to client expectations, changing regulatory conditions across the globe, and newly launched rails.

Imagine embedding a new payments offering that delivers real-time payments & cross-border movement in a week? Composable payments make it possible to do so while adhering to global standards (such as ISO 20022). Adyen, Stripe, and Affirm are some of the industry goliaths in the space (click the company links for Deep Dives we published before they become giants). Checkout.com and RazorPay are newcomers in the space quickly gaining traction.

Trigger for growth? The most critical would be acceptance & interoperability with sponsored banking programs. Financial services growth starts with payments, but then quickly requires banking functionality (stored value, offering interest yield, issuing spend cards, etc.). Bank sponsors (typically regional, mid-sized community banks) must get comfortable & integrate with these 3rd party composable payment providers.

Real-Time Payments Become a Global Force

With the US increasing activity (launching FedNow), Real-Time Payments (RTP) is able to realize exponential scale. We’ve seen the milestone benchmarks from India and their UPI payment system.

More countries & regions are making progress towards achieving a similar level of traction.

Why does this matter in 2025? US was the missing link for RTP’s global adoption. Payment volume and new use cases will see a considerable lift now that instant, low-cost settlement is available for more consumers & businesses. An added benefit is that faster turnaround times for processing can also minimize fraud. Financial institutions and business platforms that are slow to adopt RTP will risk falling behind innovative competitors.

Trigger for growth? In the US, it comes down to banks (of all sizes) turning this on for their retail, commercial, and private banking clients. Outside of the US, quality data on fraud & losses from RTP may double up (or delay) growth internationally.

AI-Powered Payments Beef up Security & Fraud Prevention

Artificial Intelligence (AI) & Machine Learning (ML) are no longer buzzwords in financial services. More providers, financial institutions, and processors are leveraging this tech to detect + mitigate (in real-time) fraudulent activity and bad actors.

AI in payments now incorporates behavioral analytics for flagging anomalies in customer behavior, and risk monitoring of transactions.

Beyond user & transaction security, AI is providing a new option for customer support (through chatbots) and automated reporting (especially for account reconciliation).

Why does this matter in 2025? The two value anchors of Security and Convenience are benefiting from artificial intelligence. Less fraud leads to less losses, which leaves more revenue to invest in payments innovation.

Trigger for growth? There’s no clear leader in AI tools for payments — the market is still experimenting with newcomers. A leading group of AI-companies that can pull away from the herd by productizing AI offerings for mass adoption is needed.

Embedded Payments Growth for Non-Financial Firms

The broader arena of embedded finance (including banking, lending, insurance) is is led by payments.

Companies with minimal (or no) financial activity in their platform are integrating these services more often. Medical, logistics, transport, property management, human resources, and wellness sectors are showing the most demand heading into 2025.

We recently discussed embedded finance as part of our ‘2024 FinTech Wrapped’ — top examples include lending products at retail checkouts, payroll capabilities for HR, and spend cards for trucking businesses.

Why does this matter in 2025? Customers are gravitating to all-in-one platforms in which trusted brands offer more services. As more non-financial companies test the waters next year, a formula is starting to appear in which the right mix of customer need and user engagement is well-matched with new payment products — leading to higher user engagement.

Trigger for growth? More success stories in the New Year from a wide assortment of industry verticals. With more market proof, the volume of businesses integrating embedded finance (starting with payments) will immediately jump.

BigTech's Influence in the Payments Landscape

Amazon, Google, and Apple are industry juggernauts transacting billions in payments each year.

A new product or change in strategy causes a cascading, global effect. As market leaders, all their experiments are closely monitored. Successes would be repeated by smaller competitors.

Apple took a bet on Buy Now, Pay Later (BNPL) with its Apple Pay Later program. However, the product struggled to scale as projected and shut down earlier this year.

Google was also active this year by adding peer-to-peer (P2P) capabilities and remittances.

Why does this matter in 2025? Financial institutions are most at risk in losing payment & deposit activity to BigTech firms, who know how to quickly build a seamless product. Banks will need to establish in-house tech proficiency (especially with user experience) in order to avoid losing market share. Collaborative partnerships with fintech providers can also bridge the gap.

Trigger for growth? Double-digit increase of Apple Pay and/or Google Pay. This would put the industry on notice that BigTech is here to remain in payments — banks should find a way to compete or partner with these leaders.

More Testing of Central Bank Digital Currencies

Central Bank Digital Currencies (CBDCs) are showing promise as the future of fiat across the globe. The key value drivers are lower maintenance costs, better transparency, and direct control over government changes in their monetary policy.

China is leading all other countries in experimenting by facilitating adoption in specific cities — such as Shenzhen, Suzhou, Chengdu, Shanghai, Xi'an, Beijing, Guangzhou, and Fuzhou.

The Digital Euro is in an early development stage from the European Central Bank, who is actively researching infrastructure & technology providers who can build a pilot for testing.

In the US, early discussions are focused on a feasibility analysis for the digital dollar, which would greatly impact the millions of unbanked individuals that still transact with physical cash.

Why does this matter in 2025? Despite what seems like minimal progress, the rising level of exploration and discovery from countries can become THE catalyst to a revamp of legacy monetary infrastructure globally. The adoption of CBDCs would come with the latest technology in payment authorization, settlement, and reconciliation. This would be a uniform standard across all banks within a country and propel momentum behind other trends discussed (especially real-time payments).

Trigger for growth? The adoption of stablecoins (USDC a prime example) for money movement. This would be the best proof point that the utility of a digital (fixed) currency is there and can expedite continuing exploration & testing. Combining CBDCs with blockchain infrastructure creates an even more compelling payments program with increased security and transparency.

More Awareness for Sustainability in Payments

Environmental awareness has arrived in payments. As consumers demand eco-friendly materials and energy efficient operations, payment providers are altering their approach and processes to align with these values.

Recyclable & biodegradable instead of plastic. Reducing carbon footprints.

Why does this matter in 2025? Sustainability may become the 4th value driver for payments (after speed, convenience, security). If the trend picks up, the industry will need to shift resources to cleaner operations and management. Mastercard (the major card network) now offers carbon-tracking.

Trigger for growth? More companies taking part in sustainable activities, especially market leaders. There needs to be belief that these actions go beyond ethics and client loyalty by benefiting the overall organization (from top to bottom).

Macro Impacts to Payments in 2025

Let’s close out this guide with a brief discussion on external factors that would influence the payments landscape in the upcoming year.

From the onset of 2025, there will be a change in the US administration with the new president (Donald Trump) starting his term. The expectation of pro-business policies and deregulation efforts can lead to banks, vendors, and businesses being open to experimenting or embedding new payment rails and infrastructure.

The level of sponsorship from banks is another influence to monitor. An increase in activity (compared to the last 18 months) would lead to more payment volume with new and existing businesses. The opposite is also possible — less bank activity would dampen the progress of payments next year.

Lastly, positive investor sentiment and funding of new payment-focused products can quickly lift the industry outlook for 2025. More choices with new programs benefit customers and push the envelope further when it comes to a modern experience.

Let’s check back in at the end of Q1 2025 for progress!

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