The payments market will continue to drive change and transform financial institutions around the world in 2025.
Each institution will have its own set of priorities influencing activity around these drivers, but there is widespread recognition of the revenue opportunities generated by these trends, as well as the risks to long-term business success for those who fail to address them.
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Growth in account-based payment volumes
The ongoing adoption of open banking standards, combined with the proliferation of new instant payment clearing rails, is fuelling the global growth in account-to-account based payments. This shift is coming at the expense of the growth rate in credit card payments. So, whilst the overall volumes of credit card payments continue to rise globally, the rate of growth has slowed. At the same time, the rate of growth of account-to-account payments is increasing.
Uptake in alternative payment network services for cross border services
Over the past five years, the cross-border payments market has seen an explosion of alternative payment network service providers, with new players creating successful franchises targeting either regional or global market opportunities. These service providers are essentially ‘super correspondents’ offering expanded distribution options, lower cost routings, and reduced risks for exotic corridors. With major payment brands like Mastercard and Visa entering the fray with services such as Mastercard Move and Visa Direct, long-established networks like Wise, Western Union, Moneygram, etc. are facing stiff competition. However, many financial institutions are looking to leverage diverse services from these different players, combining currency corridors supported by these alternative networks with their own established SWIFT based correspondent banking relationships.
Changes to clearing services with regulatory deadlines
Domestic, regional, and global payment clearing rails continually update their standards and services. Whether this takes the form of new instant payment services or updated data standards for local or cross border flows, banks around the world must maintain compliance, and even beyond that, provide new added value services around these new paradigms. In 2025, the highest profile of such changes are:
- The launch of Fedwire ISO at the end of Q1 in the US.
- New SEPA instant payment regulations in Europe, including the mandating of Verification of Payee services across all SEPA payment types, with various go live deadlines in January and October.
- In November the final deadline for the SWIFT CBPR+ ISO 20022 transition period which will see the removal of the MT1xx and MT2xx message types from the network.
There are many other initiatives impacting banks in other markets, making 2025 one of the most consequential years for such changes in a long, long time. The impact on banks, especially those with a global footprint, cannot be underestimated.
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By GlobalDataReal world emergence of CBDC based processing
In recent years, more than 100 central bank-driven pilot projects and proofs of concepts for Central Bank Digital Currencies (CDBC) have launched worldwide. Whilst only a handful have transitioned to live status, the year 2025 is set to see tangible, market go lives for production CBDC services in many more markets. The focus in nearly all of these initiatives is for wholesale market adoption rather than retail market use, marking an important first step in the journey. Banks will need to change the way they engage with their central banks, not only to access this new source of liquidity, but also how they leverage and distribute this digital currency to their wholesale businesses.
Impactful rollout of embedded AI services
There’s no surprise AI is one of the key trends in payments for 2025, but this year is expected to bring a significantly greater impact as the technology is embedded into more aspects of processing. Real world gains in back-office processing efficiencies have largely focused on areas such as fraud protection and analytics, but we’re set to see gains in areas like smart routing and automated repair. These advancements will be driven by new models applied across channels, pre-processing, and distribution.
Fintech value loop and the platformisation of agency services
Banks continue to see opportunities in partnering with fintechs in the payments space. Fintechs tend to gain market traction by providing flexible and innovative distribution services. Banks see a chance to grow their market share, and hence revenues, by providing an API driven, open platform service for payments, accounts, liquidity, and even credit solutions. The objective is to become the partner of choice for these fintechs in targeted markets based on the old adage ‘if you can’t beat them, join them’. By embracing such opportunities through investments in technology to support the platformisation of their agency capabilities, banks can tap into the Fintech Value Loop.
Mick Fennell is Business Line Director, Payments, at Temenos
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