INTERNATIONAL: The payment landscape is evolving rapidly, with advancements in technology and security reshaping the way transactions are conducted. As we move into 2025, several key trends are expected to dominate the payment sector, including the rise of AI-powered fraud, new global data standards, and the growing importance of biometrics. Analysts believe these developments will have an impact on security and efficiency but also introduce new challenges and opportunities.
In an article published by Asian Banking & Finance, the following developments have been highlighted:
ISO 20022: The global standard for financial data
A game-changing shift in the payments industry is the adoption of ISO 20022, a global messaging standard for financial institutions. Starting in November 2025, financial institutions worldwide will be required to use a single file format for message exchanges. This transition is set to streamline cross-border transactions, reduce processing times, and boost overall efficiency, according to Vijay Nagarajan, director of payments at LexisNexis Risk Solutions. However, while ISO 20022 promises significant improvements, it won’t entirely resolve issues like rising transaction costs and payment failures.
“ISO 20022 will create more structured data flows, but businesses will still need to focus on reducing transaction costs and enhancing payment reliability,” Nagarajan stated. The industry’s focus will shift towards integrating this new framework, optimizing processes, and ensuring compliance, he added.
Biometrics and AI in fraud prevention
The traditional methods of securing financial transactions—passwords and PINs—are increasingly becoming outdated. Biometrics, such as facial recognition and fingerprint scanning, are poised to take their place, offering enhanced security and convenience. Visa’s TR Ramachandran explains that the rise of passkeys—password-less authentication—will revolutionize the way consumers authenticate transactions in 2025. Deep learning algorithms will also become more advanced, analyzing transaction patterns in real time to identify risks.
“Authentication will increasingly rely on secure credentials like biometrics, reducing reliance on traditional PINs and passwords,” Ramachandran said. This shift promises a more secure and user-friendly experience for consumers and businesses alike.
Embedded finance, the next frontier
Embedded finance is set to become more integrated into digital platforms, making financial services like lending, insurance, and payment solutions accessible within non-financial ecosystems. Ramachandran predicts that this trend will gain momentum in 2025, offering consumers more flexible payment options such as buy now, pay later services.
“When executed properly, embedded finance benefits everyone involved—providers, platforms, distributors, and most importantly, the end users who enjoy seamless financial services,” Ramachandran noted. This trend is expected to blur the lines between traditional finance and digital commerce, making financial services more accessible and contextual.
AI-powered fraud and cybersecurity challenges
While AI offers solutions to fight fraud, it also presents new challenges. As financial institutions leverage AI for fraud detection, criminals are using the same technology to launch more sophisticated attacks. Deepfakes, voice cloning, and FaceID bypass attempts are becoming more convincing, complicating the cybersecurity landscape.
“Traditional security measures are no longer enough to protect against these advanced AI-powered attacks,” warned Jan Sysmans of Appdome, a mobile app security provider. To stay ahead, financial institutions must adopt comprehensive security strategies, including real-time protection and AI-driven threat detection.
Cross-border payment innovations in Southeast Asia
Southeast Asia is set to lead the charge in cross-border payment innovations. The collaboration between Thailand’s PromptPay and Singapore’s PayNow has already made it easier for consumers to transfer funds between the two countries.
This is just the beginning, with central banks in countries like India, Malaysia, and the Philippines working together to establish an instant cross-border retail payment platform by 2026.
“The NEXUS project, which involves countries like India, Malaysia, and Thailand, will be a crucial step in enhancing connectivity and enabling seamless cross-border payments,” said Hanspeter Jsler, a digital payment expert at Giesecke+Devrient.
Stablecoins and e-checkout solutions
The rise of stablecoins and e-checkout solutions is expected to reshape online payments. Technologies like Click to Pay are emerging to create a seamless, secure checkout experience that works across devices and payment channels, potentially reducing cart abandonment.
Meanwhile, stablecoins are poised for growth, with regulatory developments like MiCA in Europe and potential frameworks in the U.S. providing the stability needed for wider adoption.
“Click to Pay offers a secure, consistent experience for consumers, while stablecoins could see broader use as global regulations evolve,” said Jsler.
Alternative data: Revolutionizing credit scoring
Finally, alternative data sources are gaining traction as financial institutions seek to expand access to credit. Data points such as transaction behaviors, geolifestyle insights, and utility payment histories are enabling more accurate credit assessments, particularly for gig workers and small businesses that are often overlooked by traditional credit scoring models.
“AI models analyzing alternative data offer a more accurate and fair foundation for credit scoring, empowering underserved populations to access financial services,” explained Carey Anderson, CEO of AI analytics company 1datapipe.
As 2025 unfolds, these trends will transform the payments landscape, offering new opportunities for innovation while introducing complex challenges.
For businesses and consumers alike, staying ahead of these changes will be key to navigating the rapidly evolving financial ecosystem.