7 payments trends for 2025

Secure, safe, and simple payments – in the customer’s preferred method – are as critical for revenue in 2025 as any other year. Yet technology is evolving, and your business needs to evolve with it. You need to know what’s coming around the corner so you can prepare to meet it.

When nearly half (45%) of customers will not retry a payment when it’s declined, payment processing must keep pace with demand. We spoke to leading payments experts – a combination of merchants, our senior directors, and payments engineers – to identify the top payment trends for this year. These trends all focus on boosting your payment performance: achieving high-security, compliant payments that deliver maximum acceptance rates. 

We’ll also provide tips to improve your strategy based on these trends in 2025. That will help improve revenues, strengthen data security, and grow customer satisfaction.  

1. Machine learning: powering conversion and fighting fraud

• 71% of UK consumers would use AI while shopping
• 68% of US consumers would use AI when shopping
• 76% of Germans would use AI features for shopping 

Machine learning is the best of futuristic technology: it means crunching more data than any human mind possibly could. Whip-smart engineers are steadily working on ways to improve the algorithms that produce better payments – we’re lucky to have many at Checkout.com. You may already know that machine learning is helping to detect novel threats in fraud prevention. The technology adapts to changes across the entire payments network, so new activity informs fraud-scoring in real time.

And did you know artificial intelligence is improving conversion rates at online stores? In a world of time-poor consumers overwhelmed with digital shopping channels, AI is a vital ingredient in pushing through payments that are secure and fast. 

“We’ve built our machine learning platform to continuously improve your payment performance over time. That means every single payment you submit is compliant with laws and mandates, and has the best chance of authorization,” explains Maxime Merabet, Principal Engineer at Checkout.com.

More than two-thirds of consumers are excited to use artificial intelligence when shopping. With enthusiasm for this efficient knowledge-distilling tech growing, we predict 2025 is the year more merchants will engage audiences and drive conversions using targeted machine learning tools.

Accelerated integration of AI and machine learning in payment processing and fraud detection is the most influential trend in the payments industry, according to over half (55%) of senior payment professionals, per the Fintech and Advanced Payments Report 2025. While we’re only just scratching the surface of potential innovations, we’re excited to create new breakthroughs in machine learning for payments in 2025.

2. Payment optimization: efficiency with better ROI

• Digital commerce transaction value is set to grow 7.89% 2024-2028 (CAGR)
• Eligible merchant-initiated payment traffic achieved +3.046% acceptance rate uplift thanks to optimizations by Checkout.com

Optimization is the process of making something as good as it can be. Although it’s easily overlooked, your checkout process can benefit from some tweaks and adjustments – and deliver stronger revenue. With ecommerce revenue set to grow by 54% between 2024 and 2029 in the US alone, the opportunity is sizable.

"Payment optimization is about combining the best of technology and human expertise. It's my favorite trend for 2025 because it places the customer experience at the center, and delivers the most efficient checkout process possible," shares Daniel Linder, Senior Product Director at Checkout.com. 

How can you capture more revenue online? We create algorithms that carry out specific improvements known as “optimizations” on different types of payment traffic. These improve the ratio of attempted versus successful payments (meaning the customer’s funds are captured on the first try). In 2024, we migrated eligible merchant-initiated transaction traffic to attempt-based routing, and achieved +3.046% acceptance rate uplift. 

Cost optimization is another critical priority for businesses this year, as inflation and industry challenges continue to add pressure. Every investment decision is under the spotlight. As well as finding ways to reduce your interchange and network fees, payment optimization reduces the number of false declines. That means more of your customers’ payment attempts succeed on the first try – and you lower the risk of cart abandonment. You benefit from stronger sales conversion, plus reduced costs from fewer payment retries.

Return on investment (ROI) is often the metric that matters most. When your technology delivers more revenue, it’s worth the investment.

3. Regulation: PSD3 and cross-border compliance

• PSD3 is expected to come into effect by 2026-2027
• 63% shoppers under age 45 buy from retailers in other countries
• In Europe, digital wallets will account for 40% of total ecommerce transaction volume in 2027. That’s up from 30% in 2023

Businesses taking payments in Europe will need to ensure their payment processing meets the compliance obligations for the incoming third Payment Services Directive, otherwise known as PSD3. Alongside this, the European Commission will also issue the Payment Services Regulation (PSR). 

One of the points of focus under this new legislation is Strong Customer Authentication (SCA). Under the proposal for PSD3, there’s an obligation on payment service providers (PSPs) to improve accessibility of SCA for users with disabilities, older people and other people facing challenges regarding the use of SCA.

You may consider accepting payments via digital wallet as a way to enable customers to use multi-factor authentication. This can make it easier for you to meet SCA requirements, as digital wallets can provide a quick and easy authentication experience for customers. In Europe, digital wallets will account for a larger share of ecommerce transaction value in 2027 (40%) compared with in 2023 (30%). Therefore, increasing use of digital wallets goes hand-in-hand with evolving authentication requirements in Europe.

4. Localized payment experiences: offering the right payment methods

• Nearly two-thirds (61%) of customers have abandoned their shopping cart  because their preferred payment option was not available
• Digital wallets as an online payment method will grow 14.9% (CAGR) 2023-2027
• Roughly half (45%) of customers would feel reassured about an overseas retailer if they saw pricing in their local currency 

When you shop online, how do you prefer to pay? The answer depends on where you live – as well as your age group, culture, and nationality. This will matter more in 2025, when global companies will compete for online sales in new regions.

A shocking 61% of customers around the world abandoned a shopping cart in 2024 because they couldn’t use their preferred method of payment. Sharing payment details online requires an enormous amount of trust – and consumers need to know they could claim their funds back if something went wrong with the order. When you personalize the payment experience, you help to build vital trust. Show customers a checkout page in their own language with pricing in their local currency, and offer payment methods they normally use. A payment page feature such as Flow has a configuration option to automatically detect the customer’s locale and present locally personalized payment options.

Talking to merchants at our flagship Thrive event in Barcelona at the end of 2024, localized payment strategy was top-of-mind for many. As Gary McMahon, Senior Product Manager, Sainsbury's, explains: “Personalization – giving that customer the choice and giving them the choice that they want – that extends to payments as well.” His focus for payments in 2025 is to offer online customers their favorite payment methods.

Customers are looking for secure and convenient online payment methods. For that reason, digital wallets will become increasingly widely adopted: jumping from 50% share of ecommerce transaction value in 2023 to 61% in 2027. That’s a sizable CAGR of 14.9% between 2023-2027.

Local payment methods such as digital wallets are increasingly relevant for payouts, too. Global marketplace platforms are noticing more demand for disbursements to popular digital wallets, rather than bank accounts. This is particularly relevant in emerging markets, where mobile banking is more popular than traditional forms of banking. 

5. Embedded finance: access to consumer credit at checkout

• BNPL set for 8.8% CAGR during 2023-2027
• Global ecommerce transaction value of BNPL in 2027: $442.62bn

The integration of financial services into non-financial platforms – also known as “embedded finance” – continues to grow in importance for merchants taking payments online.

Indeed, one in five senior payment professionals named financial inclusion through innovative solutions such as embedded finance as a top payment industry trend for 2025. 

Buy now, pay later (BNPL) is an increasingly popular payment method among consumers. Analysts predict a combined annual growth rate (CAGR) of 8.8% for BNPL between 2023 and 2027. This will amount to a global ecommerce transaction value of $442.6 billion in 2027.

So-called “embedded lending”, where a customer is able to access credit at the point of purchase, is more popular among those with unstable cash flows. Half of consumers with unstable cash flow (54%) are very or extremely likely to switch to a merchant or financial services provider that offers embedded lending. 

The benefits include higher average order volume and lower cart abandonment rates. However, the trade-offs include increased payment service provider fees plus the likelihood of some user frustration, according to a 2024 Visa study.

This links to the previous big payment trend for 2025: localized payments. You can enter new markets, drive brand awareness, and strengthen customer loyalty if you offer a BNPL local payment method that’s popular in your target region. One example is Alma, which is growing in popularity in Europe, and already has a 30% adoption rate in France.

6. Tokenization to boost authorization rates

• Merchants using tokenization to improve payment authorization rates in 2024: 47% (up from 44% in 2023)
• More than two-thirds (67%) of ecommerce merchants were using either gateway tokens, network tokens or both in 2024

Tokenization – where the customer’s payment details are replaced with a string of characters that a hacker cannot use – will be increasingly mandated in 2025, and beyond. For instance, from January 1, 2025, Mastercard requires all ecommerce transactions in the MENA region to be made with network tokens. This aligns with Mastercard’s commitment to fully tokenize ecommerce transactions on its network by 2030. 

Schemes are pushing token adoption to improve the security of transactions. Merchants’ top reasons for implementing tokenization are to improve data security and reduce the risk stemming from data breaches (according to a 2024 MRC survey). Yet, there are revenue and customer lifecycle management benefits, too, as expired cards can be easily updated via network token. This means, for example, that recurring payments can avoid failure due to the customer’s stored payment details going out of date.

Moreover, non-compliance with tokenization scheme mandates leads to payment declines. To improve payment authorization rates was a reason for using tokenization for more merchants in 2024 (47%), compared with 2023 (44%), and 2022 (45%), per the MRC survey. So an important priority for 2025 is checking that you’re set up to tokenize payments in regions where you want to improve authorization rates.

7. Frictionless payments and biometric authentication 

Authentication challenge flows will remain central to the conversation on user experience of payments in 2025. Analysts identify the need to offer user-friendly ways to validate payment requests while maintaining high standards around security. 

“The most significant point of risk and innovation will be how we authenticate,” says Linder. “For a payment to be frictionless and fully integrated into our daily lives, we must be able to identify the person making the payment quickly and accurately.” 

The holy grail of the “frictionless” payment is a moving target: we cannot sacrifice the right to safe payment channels out of the desire for an easy life. However, we can surface technological updates that bring us closer to meeting the twin aims of security and efficiency.

“We also have a responsibility to make sure consumers and merchants are protected from fraudsters,” adds Linder. “To enable this, we will increasingly rely on AI and biometric authentication, such as fingerprint readers, face ID, and behavioral pattern recognition. 

“In the future, we will be paying with device types that have not even been invented yet. With the increased reliance on authentication data, it’s vitally important to keep biometric data safe because you can change your password, but you can’t change your fingerprint. We expect that AI will be a key component to solving these challenges.”

Improve authorization rates with Checkout.com

Combine the ideas above to make lucrative tweaks to your checkout. Advanced fintech helps to prevent payment declines and improve your revenue – and that’s where we come in. Our Payment Success Managers are dedicated to finding opportunities for improvements in merchant authorization rates (as well as fraud detection, tokenization, API integration, and more). They’ve written a guide to help you find these opportunities yourself: Acceptance Rate Playbook. It’s worth a look for more guidance on increasing revenue from your payment flows.

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