Voice of the Industry

Merchant payments trends driving change through 2025

Friday 8 November 2024 07:29 CET | Editor: Estera Sava | Voice of the industry

André Moeller, Payments Manager at Volkswagen Group Charging and mpe 2025 ambassador, discusses merchant payments trends expected to drive change through 2025.

 

mpe has asked their influential speakers and experts in merchant payments about the key trends shaping the merchant payments sector today and in the future. Read André's insights, and don't miss the chance to meet him at the mpe conference in Berlin, 18-20 March.

Merchant payments trends driving change through 2025

Several trends are driving change in the merchant payments ecosystem through 2025, shaping how consumers pay, how merchants process payments, and how security and convenience are optimised. Here are some of the most exciting developments: 

1. Buy Now, Pay Later (BNPL) expansion 

BNPL services have gained immense popularity, and this trend will continue to propel advancement. By 2025, merchants will integrate BNPL solutions more seamlessly into checkout processes, both online and in-store. This trend is driven by consumer demand for flexibility in payments and will boost customer loyalty and conversion rates. 

2. Digital wallets and super apps 

The rise of digital wallets like Apple Pay and Google Pay, and region-specific platforms such as WeChat Pay and Paytm is transforming how consumers engage with payments. Super apps, which combine payments with other services (e.g., food delivery, ride-hailing), will continue to grow, making payments a more embedded experience. By 2025, these will be even more essential in emerging markets, and increasingly adopted globally.

3. Cryptocurrency payments 

As cryptocurrencies become more mainstream, merchants will start accepting crypto as payment. Stablecoins, which are pegged to fiat currencies, will likely drive adoption, offering less volatility than traditional cryptocurrencies like Bitcoin or Ethereum. Blockchain-based payment platforms will reduce fees and enhance cross-border payment efficiency. 

4. Omnichannel payments 

Seamless integration of online and offline payment methods is becoming the norm. The shift toward omnichannel experiences – where consumers can start a transaction on one device and complete it on another (e.g., order online, pay in-store) – will shape merchant strategies through 2025. Unified commerce platforms will enable merchants to streamline operations and provide a consistent experience across channels. 

5. AI-driven payments 

Artificial intelligence (AI) will continue revolutionising merchant payments by enhancing fraud detection, offering personalised payment experiences, and enabling real-time decision-making. For example, AI will optimise transaction routing to reduce fees, predict preferred payment methods based on customer behaviour, and personalise promotions or discounts at checkout. 

6. Contactless payments and biometric authentication 

The pandemic has accelerated the adoption of contactless payments, and this trend is here to stay. By 2025, biometric authentication (e.g., facial recognition and fingerprint scanning) will increasingly replace traditional PINs and passwords, making payment processes faster and more secure. 

7. Cross-border payments simplification 

Cross-border ecommerce is growing, and simplifying international payments is a major trend. Blockchain solutions and digital currencies are likely to help reduce the complexity, cost, and time required for cross-border transactions. Payment platforms will continue to focus on reducing currency conversion fees and eliminating intermediaries to speed up settlements. 

8. Sustainable and ethical payments 

As consumer demand for sustainability grows, more merchants focus on eco-friendly payment options. For example, digital receipts and cardless payments reduce paper and plastic waste. Moreover, some payment platforms are integrating with carbon offset programmes, allowing consumers to support environmental causes when they make a purchase. 

9. Voice-activated payments 

With the rise of smart devices like Amazon Echo and Google Home, voice-activated payments are becoming a reality. By 2025, more consumers will complete transactions using voice commands, especially for routine purchases and reorders. This trend ties into the larger growth of AI and smart home integration. 

10. Invisible payments 

Companies like Amazon have pioneered invisible payments with concepts like ‘Just Walk Out’ technology in their cashier-less stores. By 2025, more merchants will adopt systems that allow customers to pay automatically.

Challenges for the future payments industry

The payments industry is evolving rapidly, but several challenges will arise as it adapts to new technologies, consumer behaviours, and regulatory landscapes. 

One key challenge that the payments industry will likely face is that of cybersecurity threats and fraud. As payment systems become more digital and connected, they are increasingly vulnerable to cyberattacks. Fraudsters continuously evolve their methods, using sophisticated techniques like deepfakes, AI-driven attacks, and phishing schemes. Protecting sensitive data, preventing breaches, and maintaining consumer trust will remain significant challenges, especially as contactless and digital payments become more popular. Another challenging aspect is regulatory compliance, as the global payments landscape is subject to a wide array of constantly evolving regulations. Payment providers and merchants must navigate different compliance standards, such as the Payment Services Directive 2 (PSD2) in Europe, know your customer (KYC), anti-money laundering (AML) laws, and upcoming regulations related to cryptocurrencies. Keeping up with these ever-changing laws while avoiding fines or legal issues is complex, especially for companies operating across borders.

The above obstacles go hand in hand with consumer privacy concerns. As payments increasingly rely on personal data, concerns around data privacy will intensify. Consumers are becoming more aware of how their data is used and expect transparency and control over their information. With major data breaches in recent years, the industry must address these concerns, ensuring compliance with stringent regulations like the General Data Protection Regulation (GDPR), while finding ways to leverage data for personalisation and fraud prevention. 

Balancing innovation with legacy infrastructure is also difficult. Many financial institutions and payment processors still rely on legacy systems, which can slow the adoption of innovative technologies like AI, blockchain, and real-time payments (RTPs). Migrating from outdated infrastructure to modern, scalable solutions is a major challenge, requiring substantial investment, time, and coordination while maintaining uninterrupted service. 

Some other challenges to be expected for the future of the payments industry are:

  • Cross-border payment inefficiencies: although blockchain and fintech solutions are working to simplify cross-border payments, challenges like currency exchange fluctuations, high transaction fees, and slow settlement times still exist. The lack of global standardisation in payments infrastructure and regulations creates friction when transferring money internationally, particularly for smaller businesses and consumers. 

  • Adapting to digital currency adoption: as governments and central banks experiment with Central Bank Digital Currencies (CBDCs), the payments industry must prepare for the impact of these new digital forms of money. Similarly, the increasing adoption of cryptocurrencies and stablecoins presents challenges related to volatility, security, regulatory acceptance, and integration into traditional payment systems. 

  • Merchant adoption of emerging technologies: many smaller merchants face barriers to adopting new payment technologies due to cost, technical knowledge, or distrust of digital platforms. Ensuring that emerging technologies like blockchain, AI-driven fraud prevention, and mobile payment solutions are accessible and affordable for businesses of all sizes will be key to fostering widespread adoption. 

  • Fragmentation of payment methods: with the rapid rise of new payment methods, such as digital wallets, BNPL, cryptocurrencies, and biometric authentication, the payments ecosystem is becoming increasingly fragmented. Merchants must integrate multiple payment solutions to cater to diverse consumer preferences, leading to complexity and higher costs in managing various systems. Ensuring seamless integration and interoperability among these platforms is crucial.

As the payments landscape evolves rapidly, staying ahead of these trends and challenges will be key to thriving in the merchant payments industry. Join us at the mpe conference in Berlin to explore these topics further and connect with influencers and experts like André Moeller. We look forward to seeing you at a payments conference like no other.

About André Moeller

André Moeller is a Payments, Risk & Fraud Professional Lead with over 15 years of experience. At Elli, part of the Volkswagen Group, he drives projects from concept to launch, creating payment roadmaps and participating in technical implementation across online and ecommerce platforms. A dynamic speaker at various conferences, André excels in building partnerships and optimising processes, leveraging his extensive network in gaming, TV, and new media to foster growth.


About Elli

Elli, a brand of the Volkswagen Group, focuses on innovative mobility and energy management solutions. Committed to enhancing customer experience, it offers integrated services in electric vehicle charging, digital payment solutions, and smart mobility. With a strong emphasis on sustainability and technology, Elli plays a key role in Volkswagen's transition toward electric and digital mobility, empowering users with convenient and eco-friendly options for a seamless and efficient driving experience.

About mpe 2025

mpe 2025: a payments conference like no other, is Europe’s largest merchant payments conference. With 18 years of expertise, mpe brings industry leaders together to shape the future of payments. Covering all aspects – from Open Banking, Embedded Finance, and cross-border payments to cybersecurity, AI, and PSD3 – this 3-day event features 1,500+ payments professionals and 500+ top merchants. Don’t miss this chance and build your future at mpe 2025!


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Keywords: payments , BNPL, paytech, fintech, merchants, ecommerce, digital wallet, super app, crypto, blockchain, omnichannel, artificial intelligence, contactless payments, biometrics, cross-border payments, ESG, cybersecurity, regulation, compliance, RTPs, real-time payments, CBDC
Categories: Payments & Commerce
Companies: Elli, Merchant Payments Ecosystem
Countries: World
This article is part of category

Payments & Commerce

Elli

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Merchant Payments Ecosystem

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