Over the past year, the accelerating pace of payment digitisation has become evident in every corner of the globe. While each region is at a different stage of maturity in its transition from cash, non-cash transactions are expected to grow 15% year-on-year and reach $2.3 trillion by 2027.
Payments in transition: What lies ahead for 2025
As digital platforms for payments and financial services became commonplace in some developed markets, banks, fintechs and other businesses pioneered other initiatives to attract and retain customers – writes Jeff Parker, CEO of Paymentology.
During 2024, reward programmes saw a sharp rise in adoption, as providers prioritised more tailored solutions for their customers, building loyalty with customers through incentives, competitions and rewards.
A key example was Revolut’s launch of RevPoints in the UK, adding an extra reason for customers to prioritise spending through the challenger bank, bringing a competitive reward scheme to users without a credit card.
2025
In 2025, digitisation will continue to be the underlying thread for all payments innovation.
In particular, mobile wallets are emerging as a central unifier for consumers as they seek to manage and use all of their virtual cards and other financial services under one roof.
When combined with decreasing reliance on the cards and cash in their physical wallets, access to mobile wallets is quickly becoming a pivotal consideration in consumers’ selection of their banking and payment providers.
This is particularly impactful in emerging markets, where consumers have had limited alternatives to cash and often do not have access to formal financial services.
Although significant progress has been made in the past decades, there is still much ground to cover; almost 30% of adults in developing countries do not own a bank account.
Extending access to digital payments, often utilising mobile wallets, is a key method for onboarding them to formal banking and payment services.
2024 saw many fintechs in emerging markets pioneer innovative applications and platforms to further the reach of digital payments and engage the unbanked.
Mama Money is a great example; founded in Cape Town, Mama Money reaches financially excluded consumers through WhatsApp, enabling them to interact with their money through a familiar and accessible medium.
Following significant innovation throughout the payments industry to reduce barriers to launching card payment schemes, fintechs bringing to market novel payment products like Mama Money will increase in number in 2025.
Facilitating Adoption of Embedded Finance
Consumers often do not have a nuanced understanding of the payments industry and only judge products according to a handful of factors, with fees, speed and ease of use chief among them.
It’s up to fintechs to continually raise the bar to meet ever-increasing consumer expectations, and embedded finance is an important arena for this challenge.
As financial service providers seek to embed their products within the services consumers regularly interact with, it’s key that payment processes are frictionless and inexpensive, enabling convenient customer experiences.
As adoption of account-to-account (A2A) payment rails increases, expected to increase by 212% in the UK by 2027, it’s important to remember that consumers do not have a preference between A2A, card payments or any other underlying payment technology, so it is recommended to focus a lot on the customer experience when designing embedded finance programmes.
In 2025, service providers must align all development to prioritise the highest possible value proposition for the consumer, it’s those that do this the best that will succeed.
As long as the platform is easy to integrate, banks, fintechs and other businesses will select the service provider offering the best user experience.
Balancing Fraud Management and Consumer Experience
Throughout 2024, increasing rates of fraud have been at the forefront of both consumers’ and the fintech industry’s minds.
Total losses to payment card fraud in the UK increased 7% year-on-year to H1 2024 reaching £277.7 million, leading to an increased focus from banks and other financial service providers on better protecting consumers.
In an effort to combat this, many fintechs and banks are tempted by an easy fix: adding friction to customers’ payment processes.
Fintechs able to develop platforms with hardened fraud monitoring and prevention functionality without adding inconvenience for consumers will enter 2025 ahead of their peers.
Leveraging advancements in data analysis through AI, payment providers can better identify and stay ahead of malicious actors, addressing rising rates of fraud at their core.
As LLMs, agentic AI and other emerging technologies continue to innovate at a blistering pace, fintechs have the opportunity to bolster their security and monitoring capabilities whilst building seamless customer experiences.
The payments industry is entering an exciting new era in 2025, with competing payment schemes and advancements in AI enabling significant advancements in payment products’ functions and features.
It’s imperative that, in an era of rapid industry transformation, payments providers focus on the pillars that have guided the fintech industry since its inception: boosting financial inclusion and creating better customer experiences.
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