2024 proved another significant year for the payments industry but which trends are set to shape 2025?
As noted in our payments prediction article last year, demand for cross-border payment technology has continued to rise, alongside the shift from physical cash to digital in emerging markets, and ongoing collaboration between finance and technology firms.
With 2025 around the corner, we have listed the top trends likely to shape the payments sector next year:
Buy Now, Pay Later
Flexible payment options through BNPL platforms are growing in popularity. According to Finder, around half of adults in the UK have used BNPL services, which is up from 36% recorded at the beginning of 2023. In response, government bodies including the FCA in the UK are actively introducing new regulations to ensure there are adequate consumer protections in place.
In 2025, we are likely to see the continued integration of BNPL services into payment applications. Alongside this, there will be an increase in BNPL firms expanding to new markets. This was recently on display in the UK, with BNPL provider Affirm announcing it would be expanding its operations here.
With merchants keen to offer the preferred payment options relevant to localised markets, we will also see more payment service providers and gateways incorporating BNPL as part of their integrated payment solutions.
Powering payments through AI
Artificial Intelligence (AI) will be a big topic of discussion for business leaders across all sectors, including payments. Alongside new innovations and integrations, government bodies will be actively considering new regulations to ensure any use of AI is fully compliant with existing laws.
The payments industry is already embracing AI through a variety of applications, one of which is fraud prevention. Its ability to analyse large datasets in near real time to monitor behaviour and identify anomalies that contradicts historical patterns works to the advantage of customers and merchants. In contrast to the traditional, static rule-based systems, adaptive algorithms use machine learning to identify subtle changes in behaviour, uncover emerging fraud techniques, and update their models without manual intervention from a human. These anomalies include large transactions or rapid-fire purchases, alongside geolocation and device analysis. As the technology becomes more refined, AI-powered security protocols will become an industry-standard, and reduce instances of chargebacks.
Crypto as a payment option
While cryptocurrencies have long been on the payments radar, 2025 could see stablecoins and central bank digital currencies becoming practical payment options. The election of Donald Trump as the next US President will have an impact given he has been open about his vision of making the US a crypto hub and promoting its use through new regulations. This is likely to have international implications.
With countries like the UK making headway in their research around a prospective CBDC development, these digital currencies could revolutionise cross-border payments by reducing costs and processing times.
Private stablecoins, such as USDC and Tether, will also find broader acceptance among merchants and consumers. That’s why we are likely to see an increase in the number of payments companies integrating cryptocurrency wallets and stablecoin payment options, particularly in emerging markets. However, ensuring security, regulatory compliance, and fraud prevention will be paramount as the sector matures, which will likely lead to more regulations coming into force over the coming years.
Increasing competition
Between 2014 and 2024, the market capitalisation of payment companies has over tripled in size from $400 billion to $1.4 trillion. This is a consequence of individual company growth and the rise in new market participants. It equates to a highly competitive environment with payments firms competing for more merchants and partners.
Despite this increase in competition, the vast majority of payments companies all rely on a brand identity that revolves around three core principles.
The first is a customer-first approach. Payment firms like to make the point that they don’t just rely on technology, but place huge significance on the value of client-relations. Second, an expanding list of integrated payment options, from traditional systems to alternative payment methods. Third, an ability to offer merchants access to customers in emerging markets, primarily Africa, Asia and LATAM.
As a collective offering, it is easy to see why merchants partner with payments companies. They offer a way to access new markets and diversify their customer base. The challenge is highlighting these benefits while also having a brand and innovative offering that stands out from the competition.
It emphasises the importance of a PR and comms strategy, providing payment companies with a distinct identity and strategically engaging with stakeholders. 2025 will be another year of defining trends and milestones for the payments industry. Ensuring companies take advantage of these trends and appeal to their customers and partners through PR will be paramount, particularly as the industry becomes more competitive.