6 Key Payments Issues in 2025: Digital Wallets, Instant Payments, Debit Cards, Fraud, Megamergers, CFPB’s Fate
Waves of change keep on hitting the vibrant payments business, from new channel opportunities to an uncertain whipsawing regulatory atmosphere. Here's a review of what the industry will face this year.
By Steve Cocheo, Senior Executive Editor at The Financial Brand
You just can’t blink if you’re going to monitor the payments business. Challenges come from every direction and surprises lurk in all corners. Fresh competition can arise from without and within.
Six trends and expectations will be front and center in 2025, based on conversations with payments industry people.
1. Payments Fraud Continues to Escalate in All Its Forms
As the 2024 holiday shopping season approached, Erin McCune, who often uses her LinkedIn account to dive into complicated payments issues, instead put out a simple appeal, to "payments nerds" and other people in the industry.
She asked them to warn friends and family when they saw them over the holidays to beware of payments scams. She’d already seen some coming her own way and felt that industry players could help get the word out about fraudsters’ tactics.
"I think fraud is our biggest, softest underbelly," says McCune, expert partner in payments at Bain & Co. in an interview. She thinks the payments industry needs to work on these issues in a united and significant way, but in the meantime having industry insiders warning fellow consumers that banks don’t reach out for payments credentials (and other messages) would be an active stopgap.
"People are gullible and the fraudsters have very sophisticated psychological tactics," says McCune. "They know how to manipulate people."
It was coincidental that McCune shared her thinking only days before the Consumer Financial Protection Bureau dropped its holiday surprise on Zelle’s corporate parent, Early Warning Services, and on three of its seven bank owners and Zelle participants: JPMorgan Chase, Bank of America and Wells Fargo. The bureau sued them "for failing to protect consumers from widespread fraud on America’s most widely available peer-to-peer network," per its announcement of the suit.
Zelle has been targeted by Congress and others like the CFPB for several years over scams perpetrated via the service, rather than breakdowns in security of the service itself. It came to the point where Chase and Wells Fargo were contemplating suits against CFPB over possible future enforcement actions related to Zelle.
The bureau shot first. Responses and defenses of the banking side via press release immediately came from Early Warning, the Bank Policy Institute, and the American Bankers Association, though not from the three banks cited.
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Fraud Grows from Sources Old and on the Leading Edge
The fraud challenge will not only not go away, but will acquire additional dimensions in the very near future.
Case in point, from McCune: AI agent commerce.
Broadly, agentic AI consists of GenAI that will act on instructions from an individual — or a company — and seek out goods and services to fulfill some purpose and handle all the details, including paying for the purchases. From the viewpoint of the buyer, this sounds like the ultimate in ecommerce convenience. Giving the agent AI an "allowance" grants the technology a fair deal of autonomy. McCune says the availability of such tech is quite close — companies like Stripe and Skyfire are already on it — but there are issues to weigh.
"How does my bank or a merchant or the payment processor feel comfortable that this agency purchasing on behalf of ‘Erin’ has the authority from ‘Erin’?" McCune asks. "How do we know that it’s not a rogue agent?"
Longstanding scams will also remain on the scene, according to Peter Davey, venture partner for payments and identity at the Alloy Labs Alliance. Good-old-fashioned check fraud, especially with large commercial checks, has been so significant that Davey says he’s received many calls from banks over the last year. They want to begin pushing customers towards electronic payments in general, and real-time payments in particular, to avoid growing issues with paper checks.
"The continued growth in check fraud is starting to get people interested in how they can actually solve for that problem in 2025," says Davey. The current situation, he says, "is just not sustainable."
Likewise "zero liability" on credit and debit card-based payments, originally designed to encourage usage. Davey says this concept has "created a ton of bad habits" among consumers.
"As we move forward, there has to be, at some point, a reassignment of liability in order for financial institutions to not just bankrupt themselves on fraud," says Davey.
Read more: Maximizing AI Payoff in Banking Will Demand Enterprise-Level Rewiring
2. Banks Will be Tempted By — And Fail At —Their Own Digital Wallets
In early December, in the wake of an agreement struck between Apple and the European Union, Vipps MobilePay, in Norway, became the first mobile wallet besides the company’s own Apple Pay to access Apple’s near-field communication chip.
"We have fought for years to be able to compete on equal footing with Apple, and it feels almost surreal to finally be able to launch our very own solution. This will now be a very exciting battle between the world’s biggest brand and Vipps," said Rune Garborg, CEO of Vipps MobilePay, in a company announcement. Vipps says it has agreements with over 40 banking organizations to permit tap and pay transactions with its wallet and intends to expand it throughout Scandinavia.
In the U.S. Apple announced in August that it would voluntarily open up access to the NFC for third-party developers, subject to an application process and licensing fees. (In the E.U. access is free.) The Financial Brand dug into early thinking on this at the time.
Today, there are two big questions about accessing the Apple NFC chip.
• First, will banks attempt to launch their own wallets, individually? Or by re-thinking the online-only Paze wallet — which is a collaboration among the seven big banks that own Early Warning under that organization — to include a phone-based version?
• Second, will a nonbank like PayPal or Affirm pursue the opportunity Apple is offering and found its own phone-based wallet?
Apple’s decision in the U.S. means that banks, "theoretically could build their own bank wallets," says payments consultant Richard Crone, and he believes the temptation will be strong to try it. He’s certain it’s going on in the background.
This is despite past attempts by some large banks to launch their own wallets that eventually shuttered. Paze, which has had bumps along the launchway, is really just getting started.
What’s at stake here? As much as ecommerce continues to boom, it’s still not the whole retail pie by any means. Crone says his research suggests that global retail sales will hit $30 trillion in 2025, with roughly 25% of that being online.
So, the remaining 75% "will be the brass ring that everybody in payments will be reaching for," says Crone, of Crone Consulting.
Lily Varón, principal analyst at Forrester, says that about one in four retail point of sale payments are now made with Apple Pay, while PayPal is used in some way by about 40% of U.S. consumers. So far, Apple’s strength is physical, PayPal’s has been online, though both have taken steps to increase usage on the other side of the retail fence.
"In person, cash and card are still king," says Varón, but digital payment adoption is growing. "Apple Pay, because of its design, because of its utility, and because of the pandemic has definitely had a role in driving digital payment adoption in stores."
Crone absolutely expects banks to go for it, but not succeed, on their own.
"It will be a fatal distraction for most banks, thinking they can create a wallet," says Crone. "Their attempts and their promotions for bank-branded wallets will end up helping one big player — PayPal." Access to the physical point of sale via Apple’s NFC and related technology would more than double the company’s addressable market.
Crone isn’t the only skeptic about bank digital wallets. Peter Davey sees Apple Pay’s success as too strong to spend resources reinventing it. Banks and credit unions willing to pay Apple for use of their debit and credit cards through Apple Pay are with the leader now, he points out.
"There’s a lot of power with device in hand," says Davey. "The consumer has already chosen how they want to do things, and the more we complicate matters, unless there’s really value for the customer, it’s really hard to do."
Varón points out that it can take years to establish a new payments brand or new payments channel. An exception is buy now, pay later, which, while still small in the context of all payment types, has had a rapid ramp-up in use, she adds.
Davey says that some savvy consumers might be willing to switch to a bank wallet provided that they get incentives, such as a bonus on cash back percentages. But that’s not the whole audience.
"I would say that there’s a good portion of the population, as you move earlier down in age, who don’t necessarily care about such incentives. They just want ease of use," says Davey. Those who already use Apple Pay will likely stick to it for ease. On balance, he thinks it makes sense not to buck that.
He feels much the same about Paze, as it is, let alone with any expansion. "I’m still not a huge believer that that’s a problem that’s needed to be solved," says Davey.
"What’s going to prompt the consumer to make a wallet other than the Apple wallet their default wallet?" says Erin McCune. "I have a hard time coming up with what would compel someone to do something else. It would have to be better rewards, but you could wind up with a scenario where you have different wallets for different purposes, but even so, that sounds complicated."
Read more: Why JetBlue and Apple Cards Soar Even as Reward Satisfaction Falls
3. Crypto Will Carve Out Its Place in Payments
Given the warmer attitude of the second Trump administration towards crypto, Crone thinks the desire to transact with crypto at the physical point of sale is going to increase.
Crypto wallets are generally clunky to use for purchases, but Crone thinks making the ability to spend crypto smoother and more like spending dollars via a PayPal app enabled by Apple NFC has strong potential. PayPal offers its own stablecoin, PayPal USD, pegged to the U.S. dollar.
"The proprietary prepaid structure of the PayPal stablecoin will allow it to authorize transactions in milliseconds, cutting standard crypto settlement times from minutes to a near-instant reality," says Crone.
Davey, on the other hand, is a crypto skeptic. As a tryout for hands-on background, he bought Bitcoin as an investment, and sold it, some years ago, at a gain, though at nothing like today’s prices.
He chuckles. "Now, from an investment perspective, I made a stupid decision," says Davey. "But as a payments professional, I just didn’t see any viability as a payments option." He doesn’t see cryptocurrency itself as viable in the long term and feels related issues have underscored that.
"Central bank digital currency became a popular discussion point, but we saw it fizzle off the table, because at the end of the day, there are systems in place that allow us to do things that mimic what you would get out of a CBDC, without the painful process of actually instituting it," says Davey.
A strong continuing view concerning opening up the Apple NFC chip, aired in our earlier article, is that its value will be even greater as a way of revolutionizing digital identity.
Read more: Consumers Have Embraced Digital Wallets. But They Also Want Them to Be Better
4. Instant Payments Will Inch Forward
Peter Davey thinks real-time payments, both in the form of the Real-Time Payments Network of The Clearing House and the newer FedNow program, are gaining traction and that this will continue into 2025.
The Clearing House has been releasing figures showing growth in usage for some time, but near the end of November 2024 FedNow released volume numbers for the first time, also showing growth. Up until then, FedNow had been emphasizing rising enrollments in the service by banks, credit unions and processors. While the numbers show growth, total levels are still low versus the potential, partly because more members in FedNow are in receive-only mode.
Davey says interesting use cases have begun to emerge for instant payments and he thinks this will accelerate in 2025.
One is request for payment service. This concept — sometimes denoted as "RfP" — marries messaging from billers to consumers with instant payments going back to the billers on consumers’ approval. Consumers receiving such a message can either OK immediate payment or set up a future payment. This concept is available on the automated clearinghouse network and on the TCH RTP Network. On the FedNow side, Davey continues, more institutions will have to enable the function before it catches on.
Also favoring overall growth in instant payments usage is continuing higher interest rates, says Davey. While cuts have been made, rates may not be dropping as much in 2025 as had once been suspected. As a result, corporate treasurers see continuing urgency to pull in monies owed faster, to maximize return on those funds.
Forrester’s Lily Varón notes that a moderating factor on instant payments growth in the U.S. is the existence of same-day ACH service.
"If same-day ACH didn’t exist, I think we would see a bit more of a hockey stick for instant payments, but I think growth will be pretty moderate," says Varón. She says FedNow has been very deliberate about adding capabilities to its framework to handle challenges and disputes as well as revoking payments. More in that regard must be figured out before there will be a major takeoff, she thinks.
There are so many ways of paying for things in the U.S. that the methods often compete with each other. Varón points out that neither Brazil, with its Pix instant payments system, and India, with its UPI instant payments, were historically very credit-card friendly, whereas the U.S. is very friendly to the cards.
Davey supports Varón’s point about same-day ACH versus instant payments. He points out that in December Nacha (formerly the National Automated Clearinghouse Association) closed the comment period on proposals and concepts relating to same-day ACH. One would provide additional processing window time, synched with the close of the business day in the Pacific Time Zone.
This sets up a bit of a conflict with faster payments technology.
"In my personal opinion, I’m not sure that the juice is worth the squeeze, adding extra windows," says Davey. "Potentially a settlement window on the weekend might work. But adding another layer of windows when you have a brand-new payment system [FedNow] that should be able to accomplish some of these things doesn’t make a ton of sense to me."
Such competition ranges further afield, as well. Davey points to Visa’s mid-December announcement that funds transferred to U.S. bank accounts via debit cards through its Visa Direct service’s "push to card" will have to be available to recipients within one minute. The requirement is effective in April 2025. Davey expects that Mastercard’s Send service will follow suit.
Davey points out that Visa is positioning itself to compete with real-time payment rails. A side-effect is that it reduces financial institutions’ available balances, something he says does not happen with FedNow and RTP.
Read more:
5. The End of the Subscription Economy is Nigh
In a recent forecast of payment issues for 2025, Varón and other Forrester analysts also predicted that one out of three business-to-consumer subscription companies will fail as a result of disregarding people’s requests that service or merchandize deliveries be cancelled.
"Too many B2C subscription companies rely on deceptive design practices and bad cancellation processes — at the vast cost of customer trust," the team wrote.
Banks and others in the payments business have a stake in this state of affairs, according to Varón.
"Many of the chargebacks and disputes that merchants and card issuers have to handle come from subscription charges," Varón explains.
Issuers are also able to monitor much of the data flow in this area, and as a result there’s been a movement to provide card customers with alerts about subscriptions. But now more issuers are moving towards subscription management, which the Forrester report predicts will increase tensions between issuers and subscription companies. Varón points to work Capital One has done to actually assist cardholders to cancel subscriptions, clearing away some of the hurdles consumers face with subscription vendors.
6. Next: A Tectonic Merger in the Card Business
In yearend remarks to analysts, Richard Fairbank, chairman and CEO at Capital One, said he expected to see the proposed acquisition of Discover become finalized in the first quarter of 2025. Should the deal come off as anticipated, it will have huge potential ramifications for the industry.
"The deal puts them in a position to emulate all the things that Visa and Mastercard have talked about over the years, but with the flexibility, nimbleness and agility to actually pull it off," says Richard Crone.
In his conversation at the Goldman Sachs U.S. Financial Services Conference, Fairbank spoke at length about the opportunity of joining the mammoth card operations of Capital One with Discover and its credit and debit card processing networks. This would be an advantage on the lines of a major bank being able to acquire Mastercard or Visa — and parallels the American Express approach of having both card products and a network.
"A network business is desperately scale-driven and Discover has this incredible gem of a business, but they just didn’t have enough scale of their own to really turn it into what it could be," said Fairbank. Taking advantage of the synergies in this and other aspects of the deal won’t be a slam dunk, but Crone and others see how the competitive landscape will change.
Lily Varón says she’ll be watching for the impact on consumers as the deal becomes reality.
"Will this new merged company ultimately be better for consumers or better for profits, if those things are at odds with each other?" she asks. "And how can we make sure that they’re not?"
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