2025 Emerging Payments Trends

In 2025, Payments will continue to feel the impact of three key trends that have been at work for the last decade and more. The future is in fact moving closer, as Generative AI and biometric authentication are slowly being normalized, while it is also unevenly distributed. Both technologies also enable adaptive reuses of data to extract additional value and deepen customer relationships, but the model behind these plans is as old as the hills: targeted offers based on data profiles. These innovations offer the potential of long term impact within Payments, possibly reshaping how payment products are developed and experienced, changing how authentication takes place and who controls it, and repositioning the payment within an overall value chain. 2025 is the time when the nature of these impact will become more clear as technological capabilities and regulatory landscapes will become more certain. 

AI’s Impact Is Smaller and More Distant Than You Have Heard. Generative AI, and AI more broadly, are here to stay and will be part of emerging business practices. However, the impact of these technologies will fall well within the scope of sustaining rather than disruptive as regards the provision of payments capabilities. While the overall impact will be unevenly distributed across types of work, even the deepest impact areas will take longer to see significant change than has been suggested. Based on revenue estimates, it will be many years until commercial applications of Generative AI services reach a level of critical mass or even proven effectiveness. 

It’s the Moment of Truth for Biometric Authentication. The technologies and distribution channels behind biometric authentication are well established and well accepted by most consumers after nearly a decade of experience with Mobile-OS based use cases. The benefits in the form of fraud reduction and simplified payment experience are also well-known. What remains to be seen is how the economics of implementation pencil out. As we head into 2025 and beyond, widespread usage of biometric authentication for online payments remains uneven, and has been slow for physical POS. US companies will have to focus on matching the benefits to the costs and identifying models that support implementation costs, while remaining flexible enough to adapt to potentially shifting regulatory guidance. 

Targeted Advertising Comes to Payments. Companies have been trying for decades to improve the quality and relevance of their goods and services using data they have about their customers. Some of these efforts have offered real gains over the years, but the all-time most lucrative use of consumer data has been through targeted advertising that allows companies to identify the customers most likely to be amenable to their offers. Within payments, this model has appeared in certain digital wallets as well as some card-based offerings, either using the card as an identifier, or within the issuer app. Issuers, but also lenders and processors will have to think carefully about the upsides and downsides to this kind of extension of their current customer relationships, bounded by emerging regulations such as this year’s CFPB 1033 rule. Relevance at the point of purchase continues to be a delicate dance between location, identification, offer, payment type, and cost. The continued presence of the digital targeted advertising model suggests that for many companies, selling targeted access could be more lucrative than improved customized cross sell.