Predictions 2025: Payments Disruption Roars Ahead
It’s been quite a ride for payments in recent years: From 2020 through 2022, the COVID-19 pandemic flooded the market with tumult and innovation in equal measure. In 2023, we battened down the hatches after the groundswell of that innovation. 2024 was about setting our businesses apart from competitors after all that change by leveraging payments technology to wrap value around the payment itself.
So what awaits us in 2025? More fits and starts, and significant disruptions to the status quo:
- Geopolitical tensions and wars will double the flow of payments through alternative rails. After Russia invaded Ukraine, both Visa and Mastercard booted all Russian transactions off their rails — so Russian banks and payment entities shifted domestic payments to the local Mir payments system. Large B2B transactions, such as oil trading, are already using alternative payment systems like China’s CIPS and Russia’s SPFS due to sanctions on major oil-exporting countries. With more geopolitical tensions and nationalism on the horizon, governments divert more payments volumes away from global rails and onto their local ones to reduce global dependencies and oversight. Global payment companies and banks must decide whether to support local payment rails and diversify offerings, potentially risking sanctions, or focus on core markets.
- Cash use globally will fall 40%, displaced by the successful globalization of UPI and Pix. 2025 will mark an inflection point for markets where cash has been sticky. In 2025, account-to-account and real-time payments will displace cash in Europe and Latin America, especially in countries with younger populations who are open to non-cash payment methods. India’s Unified Payments Interface (UPI) launch in Peru will set off a domino effect in the region, plus a slew of innovation to follow. While the US is cashless in pockets, its broader inability to displace cash usage of the un- and underbanked will hinder its progress.
- B2B payments will be a hotbed of M&A activity, fueled by rate cuts and funding. We expect at least a dozen big companies to acquire smaller B2B payments companies in 2025. The upside: Business customers will benefit from more orchestrated and consolidated B2B payments solutions in the market. Competition in B2B payments will intensify: For example, think of how accounts payable invoice automation vendors like Basware, Coupa, and Esker are rapidly expanding into B2B payments and pursuing acquisitions. The upshot: If they move quickly, there are opportunities for bigger companies to find acquisition targets to complement their B2B payments capabilities.
- One-click checkout will backfire for one in five merchants, increasing their costs by 30%. Counterintuitively, we expect that consumers will experience more, not less, frustration with resurging one-click checkout (1CC) options. Why? 1CC options are varied and compete with many other systems vying to autopopulate data and automate checkout experiences. Consumers will not have their data up to date with all the many players they’ll encounter at checkout and will inadvertently place orders with the wrong information autofilled — or even complete orders before they intend to. The result: As they attempt to rectify these checkout-optimization efforts gone awry, merchants will incur higher costs for customer service and shipping and logistics.
Read our full Predictions 2025: Payments report to get more detail about each of these predictions and read additional predictions. Set up a Forrester inquiry or guidance session to discuss these predictions or plan out your 2025 strategy.
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