Payment trends 2025: Transforming innovation into revenue growth

Introduction

The payment industry in 2025 is a critical arena for innovation and growth. Businesses can no longer afford to react to change—they need to proactively leverage key payment trends to accelerate revenue, optimize operations, and dominate in new markets. This guide outlines actionable strategies for harnessing what we see as some of the top payment trends this year.

Market expansion through localized payments

As businesses continue to tap into global eCommerce markets, the localization of payments has emerged as one of the top trends in 2025. Offering region-specific payment methods, currencies, and experiences is no longer an option but an expectation, especially in high-growth regions like LATAM, APAC, or the Middle East. This shift is driven by the demand for seamless, familiar payment experiences that build trust and remove barriers to completing purchases.

Localized payments deliver measurable benefits. Businesses using localization strategies achieve up to 20% revenue growth. But this isn’t simply about adding more payment methods. In regions like Brazil, where PIX is used by 90% of the adult population, or India, where UPI processes billions of transactions annually, success lies in understanding and prioritizing the payment methods that matter most to consumers. Offering too many options risks creating checkout fatigue, which undermines conversions.

The growing use of local acquiring is another highlight of the localization trend. Transactions processed in local currencies deliver 12% higher auhorization rates and reduce the fees associated with cross-border payments​. This means fewer failed transactions, lower costs, and a smoother customer experience.

The rise of Merchant of Record (MoR) models has also changed how businesses approach market expansion. By managing local compliance, taxes, and currency processing, MoR allows businesses to enter new markets 97.8% faster than those establishing local entities. This speed and flexibility are invaluable for gauging market potential without significant upfront investments.

This shift toward payment localization reflects a broader trend: consumers expect global businesses to operate like locals. Companies that embrace this evolution are setting the foundation for long-term success in increasingly connected markets.

Data-driven performance optimization

Businesses that treat payments as a growth strategy, rather than a cost center, are set to maximize their revenue opportunities. Payment performance optimization starts with having real-time access to the right transaction data. However, the path to optimization is far from universal; 40% of businesses still lack the visibility needed to act on key metrics like approval rates, issuer declines, and fraud triggers​. Many of our customers have been seeking guidance on leveraging data points to enhance their performance, reflecting growing interest in data-driven insights.

The stakes are high. Fragmented payment systems and static processes are no longer sufficient in a hyper-competitive market. Companies are moving toward a data-driven approach, where every transaction is an opportunity to refine operations and recover potentially lost revenue. Real-time insights enable businesses to pinpoint inefficiencies, such as frequent declines on specific issuers or poorly calibrated fraud thresholds, and implement immediate corrective actions.

Incremental improvements can yield transformative results. Businesses that deploy dynamic routing based on real-time reporting and analytics can adapt to issuer preferences, automate retries for declined payments and increase revenue by up to 19%.

Tokenization to redefine payment security and success

While the primary driver for tokenization remains payment security and reducing the risk of data breaches, nearly half of businesses now use it to improve authorization rates and streamline the customer experience.

The global tokenization market is projected to grow at a CAGR of 22.57% from 2024 to 2031, reflecting the growing reliance on this technology​. Businesses using tokenization see 26% less fraud and achieve 2% higher transaction authorization rates, which can translate to millions in additional revenue. These gains are tied to the seamless user experience tokenization offers. By storing card details securely, tokenization eliminates the need for customers to re-enter payment information, reducing clicks to payment and lowering the risk of abandoned transactions.

Tokenization delivers another critical advantage: revenue stability. Automatic updates to card details ensure recurring payments or repeat purchases continue uninterrupted, even when customers’ cards expire. This eliminates one of the most common points of failure in subscription billing and strengthens predictable revenue streams.

Platforms tap embedded payments to scale and grow

Platforms—including marketplaces, gig economy apps, and commerce facilitators—now drive a significant share of global transactions, with marketplaces alone accounting for up to 60% of online sales and GMV projected to exceed $3.8 trillion in 2024. To scale efficiently and unlock new revenue streams, these platforms are adopting embedded payment systems that streamline operations and enhance user experiences.

Embedded payments integrate payment capabilities directly into platform ecosystems, transforming payments from a backend process into a growth enabler. This approach simplifies multi-party transactions through features like decoupled pay-ins and payouts, which optimize cash flow and currency conversions, and split payments, which ensure seamless distribution of funds between platforms, sellers, and service providers. These tools allow platforms to scale globally while maintaining compliance and operational efficiency.

The embedded payments market, valued at $83 billion in 2023, is forecasted to grow at a CAGR of 30% to reach $730 billion by 2032​. This growth reflects the strategic role embedded payments play in driving platform revenue. By consolidating payment flows with auto reconciliation, enabling tailored invoicing, and offering localized payment options, platforms can deliver seamless financial experiences that strengthen loyalty and build trust with both buyers and sellers.

AI and ML expanding use cases in payments

AI-powered fraud models are becoming more proactive, analyzing real-time transaction data to anticipate and prevent emerging fraud tactics. This minimizes chargebacks and creates smoother payment flows. However, the benefits of AI extend well beyond fraud. Businesses are now adopting AI for dynamic payment routing, using machine learning to analyze issuer behaviors, processing fees, and success rates. These systems identify the optimal transaction paths, boosting approval rates and reducing costs.

Operational efficiency is another area where AI excels. Payments generate enormous amounts of data, often too complex to handle effectively. AI tools streamline transaction matching, automate reconciliation, and identify inefficiencies, reducing errors while accelerating workflows.

AI is also revolutionizing customer experience. By analyzing consumer behaviors in real time, AI enables hyper-personalized payment options, such as tailored BNPL plans or dynamic pricing based on customer profiles. These tools improve satisfaction and drive higher conversions, with research showing that businesses excelling at personalized interactions generate up to 40% more revenue than the industry average.

PSD3 to fuel innovation in payments

PSD3 is set to bring fundamental changes to Europe’s payments ecosystem, but its impact goes far beyond compliance with SCA rules. For businesses, it offers a blueprint to reduce fraud, enhance transparency, and leverage innovations like open banking to accelerate revenue and improve customer trust.

One of PSD3’s key focuses is combating fraud. By introducing mandatory payee name and IBAN checks, the directive significantly reduces the risk of spoofing fraud, helping businesses avoid costly chargebacks. Clearer transaction statements also empower consumers to verify payments with greater confidence. These updates not only protect businesses but also build customer trust, a critical factor for higher conversion rates.

PSD3’s emphasis on cross-border payments adds another layer of value. Requirements for upfront FX rate disclosures and clear settlement timelines will make international transactions more predictable, eliminating hidden costs and improving customer satisfaction. Businesses with multi-currency operations will benefit from a more transparent and streamlined process, attracting global customers while optimizing payment efficiency.

Perhaps most exciting for businesses is the evolution of open banking. PSD3 aims to expand on PSD2 by improving API standards, enabling faster account-to-account payments, and creating a more robust ecosystem for third-party integrations. These advancements can help businesses diversify payment offerings, reduce processing costs, and increase payment speed.

To prepare for PSD3, businesses should focus on integrating fraud prevention measures and streamlining cross-border payment processes. It’s also the right time to explore open banking capabilities, which can reduce reliance on card networks and open new revenue streams.

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