2025 Credit Payments Trends

In 2025, credit card issuers are not just facing change; they are at the forefront of shaping the future of the consumer credit industry. Despite the weakening consumer economics, the industry is not just adapting but also thriving and evolving. Usage continues to rise, technologies have advanced, and card products are moving beyond plastic payment cards. Credit card issuers, known for their remarkable adaptability and resilience, face three critical challenges: a disrupted business model, deteriorating credit quality, and the broadened definition of a credit card. This need for adaptation is a call to action, motivating the industry to embrace change and drive innovation. 

Credit risk and the credit card model revisions require issuers to address three essential trends in 2025. These trends are staying ahead of risks, regulators, and the recession; realizing net revenue is king (or queen); and walking, not running, toward artificial intelligence. Issuers must be agile to stay ahead of threats. The focus must be on net revenue, not the gross dollar processed, and they must use data to drive decision-making, strategy, and business focus. 

Amid the challenges, the credit card industry must prioritize stability. While employment is substantial, consumers face inflation and interest rates that are not falling as quickly as they surged. In such a scenario, the industry must focus on controlled growth, bank liquidity, and, most importantly, conservative lending to ensure stability. This focus on stability is crucial to instill a sense of security in the industry's stakeholders. 

Card issuers’ moves need to recognize that net revenue is king (or queen). Credit card issuers offer revolving loans based solely on a signature, a reasonable faith expectation that the consumer will repay, and a pricing model calibrated to risk. However, circumstances may change, and the issuer is bound by the rate established during underwriting, meaning the credit quality may be out of sync with the account risk. Issuers need to anticipate these swings before booking the account, maintain account surveillance throughout the relationship, and have sufficient workout strategy should the revenue head towards charge-off. One charge-off a $5,000 account can offset the revenue generated by 12 to 15 other credit cards. 

Artificial intelligence is here, and the industry should walk, not run, toward it. Promising features will develop, but keep your eye on the fundamentals of solid underwriting, effective credit management, and the operational bottom line in 2025. Operational technologies that move payments, maintain accounts, and shield against risk operate on practical machine learning functions today that are strong and ready to facilitate solid operational performance.