If there’s one constant in payments, it’s change — often accompanied by higher costs and new complexities. But alongside these challenges comes innovation, giving merchants, payment providers, and consumers new ways to adapt and thrive.
From the rise of alternative payment methods and regulatory shifts to the growing power of AI in decision-making, the payments ecosystem is evolving rapidly. Here’s what we anticipate in 2025 — and how the industry can navigate the road ahead with resilience and strategic foresight.
Acceptance Fees Continue to Rise
Death, taxes, and increased network fees. While higher rates are nothing new for merchants, the ability to fight back is. More merchants will look to adopt strategic features such as least-cost routing to gain leverage against ever-rising network fees. The question is, will the domestic/alternative networks also raise their fees, and at what point does regulation step in?
ML/AI Usage in Payments Will Expand Beyond Fraud
Machine learning (ML) and artificial intelligence (AI) in payments is evolving beyond fraud management, with new use cases streamlining decision-making across transactions. For example, it can help determine whether to use network tokens or account numbers based on issuer authorization rates or identify the optimal processor for a transaction by analyzing cost, conversion, and reliability.
These advancements enhance efficiency, reduce costs, and improve customer experiences, showcasing AI’s growing influence in the payments ecosystem.
Merchants Continue to Demand Processor-Agnostic Solutions
Merchants are increasingly adopting multiprocessor environments to enhance redundancy, optimize costs, and improve transaction approval rates. As a result, they are demanding processor-agnostic solutions for critical functions like tokenization, fraud prevention, and 3DS authentication. These agnostic tools enable merchants to maintain flexibility and avoid vendor lock-in, allowing seamless integration and consistent functionality across multiple processors.
By leveraging processor-agnostic solutions, merchants can better adapt to changing market needs, reduce operational complexity, and ensure a more resilient payments infrastructure.
Authentication Regulation Continues to Expand
Japan is poised to implement new authentication regulations in March 2025, reflecting the recent trend of advanced markets adopting regulatory measures to enhance consumer protection. We anticipate that additional APAC markets will consider similar approaches in the latter half of 2025, mirroring the adoption trajectory of EMV chip cards, where liability shift occurred in Europe in 2005 and was followed 10 years later in North America.
Acquirers Re-Evaluate High-Risk Merchant Portfolios
With Visa’s VAMP program coming to market, a new light will shine on high-risk merchants in acquirer’s portfolios. Acquirers must address this by reducing fraud rates on high-risk merchant accounts or moving away from underwriting specific types of businesses altogether. How will this change ultimately affect the partnership/M&A landscape in the acquiring world? Time will tell.
More Merchants Moving Toward Alternative Payment Methods
Notably, Pay-by-Bank is being pushed by U.S. legislation.
The Consumer Financial Protection Bureau (CFPB) has introduced new open banking rules for the U.S. market, enabling customers to authorize third parties to access their account information and initiate secure payments via “pay-by-bank.” Under these regulations, banks are required to provide this functionality without charging fees, with compliance expected between 2026 and 2030.
Pay-by-bank offers advantages such as lower transaction costs — since these payments bypass card networks — and historically lower instances of fraud. However, consumer adoption varies by region, with U.S. consumers trailing behind other markets. Additionally, pay-by-bank systems can be challenging to implement, lack a credit option, and may sometimes experience settlement delays.
2025 will be a pivotal year in payments. The merchants and acquirers who adapt to rising fees, regulatory changes, and technological advancements will survive and thrive. By focusing on efficiency, resilience, and customer-centric solutions, the payments industry can transform challenges into opportunities.
Jeff Hallenbeck is the Head of Payments at Forter, where he focuses on driving innovation in the payments and risk space through data-driven product partnerships. His mission is to collaborate with industry leaders to design groundbreaking solutions that expand Forter’s impact and help businesses stay ahead in the evolving payments landscape.