As we all know, the payments landscape is undergoing a profound transformation as new technologies, regulatory shifts and evolving consumer preferences redefine how transactions occur.
That does not mean that we should be complacent about the change.
According to Deloitte industry insights for 2025, several major trends are shaping the future of digital payments.
From the decline of cash to the growing influence of artificial intelligence (AI) in fraud prevention, these changes present both challenges and opportunities for financial institutions, merchants and consumers alike.
1. Cash is Finding its Floor
While the decline of cash payments has been a long-term trend, 2025 is expected to mark the point where cash usage stabilises rather than continues to fall.
Federal Reserve data shows a consistent decrease in check usage, with digital alternatives such as peer-to-peer (P2P) payments, credit cards and debit transactions replacing traditional paper-based methods.
As major retailers like Target, Whole Foods and Old Navy discontinue cheque acceptance, businesses across sectors are increasingly shifting towards a “cheque-zero” environment.
For businesses and consumers, this signals a shift toward digital-first payment ecosystems, with mobile payments, tap-to-pay options and account-to-account (A2A) transactions becoming the norm.
However, despite the decline in cheque and cash transactions, physical currency will likely retain a role in certain segments of the economy, particularly among unbanked populations and in emergency preparedness scenarios.
2. Regulatory Scrutiny on Nonbanks Increases
Regulators are taking a closer look at nonbank financial companies (NBFCs), particularly in the payments space.
With increasing consumer protection concerns and financial stability considerations, regulatory bodies are expanding oversight to include fintech firms and digital wallet providers.
The Consumer Financial Protection Bureau (CFPB) and the Financial Stability Oversight Council (FSOC) have already moved to impose new compliance frameworks on nonbank entities.
These regulations aim to provide consumers with the same protections offered by traditional banks while ensuring that fintech firms operate within clearly defined supervisory boundaries.
As compliance costs rise, some nonbank players may find it unsustainable to continue offering payment services, potentially leading to market consolidation or strategic exits.
3. BNPL Expands Beyond Retail
The “Buy Now, Pay Later” (BNPL) trend is moving beyond e-commerce and retail into new industry sectors, including housing, utilities and healthcare.
As inflation continues to impact consumer spending power, BNPL providers are positioning their services as viable short-term financing options for essential expenses.
Large BNPL providers such as Affirm and PayPal are already offering higher spending limits, with some consumers eligible for up to $20,000 in BNPL credit.
Meanwhile, traditional banks are entering the BNPL space, leveraging their regulatory expertise to provide structured instalment plans.
As more consumers turn to BNPL for everyday expenses, financial institutions that fail to integrate these options risk losing market share to more adaptable competitors.
4. ISVs Strengthen Their Grip on SMB Payments
Small and midsize businesses (SMBs) are increasingly turning to Integrated Software Vendors (ISVs) for their payment processing needs.
ISVs provide comprehensive, all-in-one solutions that combine payment processing with business management tools, making them an attractive alternative to standalone point-of-sale (POS) systems.
With digital wallets capturing a growing share of transaction volume – accounting for 37% of North American e-commerce transactions in 2023 – ISVs are ensuring seamless integration with preferred payment methods.
As more businesses look for streamlined solutions that enhance efficiency and customer experience, ISVs are set to play a crucial role in shaping the SMB payments landscape.
5. AI Revolutionises Fraud Prevention
Artificial intelligence (AI) is reshaping fraud prevention by enabling financial institutions to detect and prevent fraudulent activities in real time.
AI-driven fraud models analyse transaction patterns, user behaviour and digital identities to identify suspicious activities more accurately than traditional rule-based systems.
Major players like Visa and Mastercard have already implemented AI-driven fraud detection systems, reducing false positives and improving transaction security.
Mastercard’s AI-driven fraud prevention tools, for example, have increased the speed of merchant fraud detection by 300%.
Similarly, Capital One’s “Eno” AI assistant is leveraging machine learning to flag potential billing errors and unusual transactions.
However, AI is also being weaponised by fraudsters, leading to an arms race between financial institutions and cybercriminals.
Deepfake technology, synthetic identity fraud and AI-driven phishing scams are becoming more sophisticated, requiring continuous advancements in fraud prevention strategies.
What’s Next for Payments?
As these trends unfold, financial institutions, payment providers and merchants must adapt to remain competitive.
Key strategies for staying ahead include:
- Investing in digital-first payment solutions to meet the growing demand for mobile and contactless transactions.
- Strengthening compliance frameworks to navigate evolving regulatory requirements for nonbank payment providers.
- Expanding BNPL offerings to include essential services such as healthcare and utilities.
- Partnering with ISVs to enhance payment integration and provide seamless merchant experiences.
- Leveraging AI-driven fraud prevention tools to mitigate emerging threats while ensuring smooth transaction approvals.
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