Digital wallets and open banking set to dominate payments in 2025

Digital wallets and open banking are pivotal forces set to transform the payments landscape in 2025, according to a recent survey of merchants conducted by European financial services provider payabl. The survey reveals that 81% of merchants anticipate a surge in digital wallet usage, while 69% expect open banking and instant bank transfers to gain popularity as consumer demand for convenient, secure payment options continues to grow. Other methods that merchants anticipate will become more popular include QR code payments (33%), BNPL options (25%), cryptocurrencies (21%) and CBDCs (11%).  

The findings reflect an industry-wide shift toward faster, more adaptable payment methods that meet consumer expectations in an increasingly digital economy. A majority of respondents (59%) noted that consumer demand for convenience is the top driver of innovation, followed by advances in technology (52%) and regulatory changes (49%), underscoring the competitive advantage of seamless, user-friendly payment solutions.  

Merchants are responding to payment challenges with a focus on technology that supports both security and operational agility. Around two-thirds (65%) of merchants plan to invest in artificial intelligence (AI) over the next 12 months, recognising its role in real-time fraud detection and improved payment performance. Additionally, 56% are adopting data analytics to gain critical insights into payment behaviour, while 38% prioritise API-based integrations to enhance flexibility and security in their payment ecosystems.  

When asked about the top challenges expected for the year ahead, fraud prevention topped the list, with 63% of respondents identifying it as a primary concern. Following closely behind, regulatory compliance also emerged as a significant challenge, with 60% of participants highlighting the complexities of navigating evolving regulations. Cybersecurity threats also ranked high, with 46% of respondents expressing concern over the increasing risks to payment systems. 

In addition, the survey identified other challenges that are likely to impact the industry, including the integration of new technologies like AI (44%), and the ongoing complexities of cross-border payments (10%). Customer experience optimisation and cost management were also cited by 32% and 25% of respondents, respectively. 

As Europe’s SEPA Instant payment deadline approaches on 9 January 2025, industry readiness remains uncertain. While banks and PSPs are required to support instant payments, only 25% of respondents believe the industry will be fully prepared, highlighting the importance of collaborative efforts across regulatory bodies, financial institutions, and merchants to ensure a smooth transition.

Respondents identified instant payments as the most transformational trend in the payments landscape, with 57% identifying it as having the biggest impact on the industry. Regulatory changes, including PSD3 and APP fraud regulations, were also highlighted, with 50% of respondents noting their influence. The integration of AI and machine learning was identified by 44% as a critical trend reshaping the industry. 

Other notable trends that are making an impact include open banking (35%), BNPL (27%), and cross-border payments (25%). Meanwhile, cryptocurrencies and digital assets are also garnering attention, with 19% of respondents recognising their growing influence. Lesser-discussed trends include embedded finance (13%) and sustainable payments (8%). 

 

UK sets out National Payments Vision 

The UK government has published the National Payments Vision, setting out its ambitions for the UK’s payments sector to deliver world-leading payments and support the growth mission. It charts a path for government, regulators and the sector towards a payments ecosystem delivered on next generation technology, where consumers and businesses have a choice of payment methods to meet their needs.

The Vision is designed to take action to strengthen the foundations of today’s ecosystem and steer future activity to drive innovation, facilitate competition and ensure security. In doing so, it addresses findings from the independent Future of Payments Review 2023, led by Joe Garner, and extensive stakeholder feedback.

The payments landscape has evolved significantly in recent years – and payments are increasingly digital. Looking ahead, developments in next-generation technologies like distributed ledger technologies and AI, as well as enhanced data sharing, have the potential to fundamentally alter the ecosystem. The government acknowledges that the UK must act quickly to seize the opportunities of the future or risk falling behind international peers.

The Garner Review challenged the government to set a strategic vision for UK payments. The government’s response is that a world-leading ecosystem must ensure trusted payments, delivered on next-generation technology, with more choice for consumers and businesses.

The regulatory framework must be clear, predictable and proportionate. The Prime Minister has stated that regulation should support growth and unlock investment – this requires regulators to coordinate better to manage their collective impact on the sector. To support this, the government has outlined its priorities for UK payments through a joint remit letter to the FCA and PSR and welcomes the regulators’ commitment to revise their existing memorandum of understanding on cooperation in relation to payments regulation.

Resilient infrastructure that supports innovation is a prerequisite to a healthy ecosystem and is essential for trust, but upgrading the UK’s retail payments infrastructure has been slow and challenging. The government has considered the role of the New Payments Architecture programme and concluded that a more agile and flexible approach to delivering the UK’s infrastructure needs is required to ensure the UK is primed to seize the opportunities of next-generation technologies. The Vision sets out that the newly established Payments Vision Delivery Committee will, through work led by the Bank of England and PSR, clarify the upgrades required to the existing Faster Payments System, assess longer-term requirements and the appropriate funding and governance arrangements needed to deliver this – including proposals to reform Pay.UK.

The National Payments Vision also outlines three key pillars designed to guide future activity – innovation, competition and security. In line with these pillars, government has provided direction on priority initiatives in the retail payments arena, in particular open banking and tackling fraud.

A statement from HM Treasury notes that it is crucial that seamless account-to-account payments – enabling consumers to pay for goods and services in shops and online directly from their bank account – are developed. This will provide greater choice to consumers and merchants in how they make and receive payments. Open banking has a vital role to play in delivering this. The Vision, therefore, clarifies regulatory responsibilities for open banking, transitioning away from current arrangements to the FCA acting as the UK’s regulator in the future, ensuring effective engagement with other authorities as needed. This will support the pace of progress on core activities to agree a sustainable commercial model and consumer protections.

Reflecting the need to consider a range of innovations in this dynamic landscape, the Vision sets out the government’s commitment to explore a potential retail Central Bank Digital Currency (CBDC), the digital pound. No decision has been taken on whether to launch a digital pound, and the government says that any decision to proceed would be accompanied by the introduction of primary legislation, which would guarantee users’ privacy and control of their money. Regardless of the final decision, the work will support private innovation and deepen the expertise of UK public authorities.

The Vision outlines the continued need to maintain high standards of consumer protection and ensure people and businesses can make payments efficiently and safely. To further build the effectiveness of payment fraud regulation, the FCA will lead work to manage existing overlaps between itself and the PSR, and the PSR has committed to an independent post-implementation review of the authorised push payment fraud reimbursement rules after 12 months. The government also recognises the role that the technology and telecommunications sectors play in tackling authorised push payment fraud.

Delivering this Vision requires collaboration across the entire ecosystem – government, regulators, financial services providers, merchants and consumer representatives. A Payments Vision Delivery Committee has been established to drive the next steps, supported by an engagement group comprised of varied representatives from across the sector. 

 

Global economy forecast for solid growth in 2025 despite trade uncertainty

Goldman Sachs Research (GSR) forecasts another solid year of global economic growth in 2025. GSR economists project the US will outperform expectations while the euro area lags behind amid fresh tariffs that are anticipated from the Trump administration.

Worldwide GDP is predicted to expand 2.7% next year on an annual average basis, just above the consensus forecast of economists surveyed by Bloomberg and matching the estimated growth in 2024. US GDP is projected to increase 2.5% in 2025, well ahead of the consensus at 1.9%. The euro area economy is expected to expand 0.8%, compared with the consensus of 1.2%.

“Global labour markets have rebalanced,” said Jan Hatzius, Chief Economist, Goldman Sachs Research, in the report ‘Macro Outlook 2025: Tailwinds (Probably) Trump Tariffs’. “Inflation has continued to trend down and is now within striking distance of central bank targets. And most central banks are well into the process of cutting interest rates back to more normal levels.”

The world’s largest economy is expected to grow faster than other developed-market countries for the third year in a row. The re-election of US President Donald Trump is predicted to result in higher tariffs on China and on imported cars, much lower immigration, some fresh tax cuts, and regulatory easing. “The biggest risk is a large across-the-board tariff, which would likely hit growth hard,” Hatzius added.

 

SocGen to deploy MICA-compliant stablecoin

In accordance with its strategy of deployment on several blockchains, after Ethereum and Solana, Societe Generale-FORGE (SG-FORGE) has announced its intention to deploy its MiCA-compliant stablecoin EURCV on the XRP Ledger (XRPL) to increase adoption. EURCV will benefit from the scalability, speed, and low cost of the XRPL, a secure and decentralised Layer 1 blockchain.

Over the past decade, the XRPL has been the home of over 1,750 unique applications and exchanges, processing over 2.8 billion secured transactions since 2012 and supporting over 5 million active wallets.

SocGen says that the advantages of XRPL deployment include that it is natively designed to tokenise and transfer any type of asset. Tokenising real-world assets on the XRPL can leverage its speed, low transaction fees, and scalability to ensure seamless settlement and liquidity. The XRPL processes transactions in around 3-5 seconds. For a stablecoin, this provides a competitive advantage by enabling fast and frictionless cross-border payments, remittances, and real-time banking services.

The XRPL can handle up to 1,500 transactions per second (TPS), ensuring scalability for large-scale operations. Further, its design is tailored for cross-border payments, enabling fast, low-cost, and efficient transactions across different currencies and regions.

This multi-chain approach is set to launch in 2025, pending final technical integrations. EURCV will be issued on XRPL using Ripple Custody solutions (ex-Metaco, who are already used as a technical service provider).

 

EY and Regnology look to drive modernisation of regulatory and tax reporting

The EY organisation has announced an alliance between regulatory reporting firm Regnology and EY ifb, to give clients access to regulatory and supervisory technologies and solutions to help ensure streamlined compliance and drive large-scale transformations.

With regulators and tax authorities asking for increasingly granular real-time data and continuous compliance, the EY–Regnology Alliance is designed to provide clients with new modules covering the full span of regulatory reporting and supervision processes in detail. It will also provide cloud-native and AI-supported offerings that address the specific regulatory requirements of different jurisdictions and adapt to future regulatory changes.   

Through the Alliance, EY ifb leverages Regnology’s experience, serving both regulators and the regulated entities with technology facilitating seamless communication and collaboration. This should help grow customer groups and develop integrated service offerings addressing banking and tax reporting requirements from the perspective of both supervised and supervising bodies.

 

Volante Technologies launches real-time payments intelligence solution

Volante Technologies has launched Volante Payments Intelligence, a solution that offers financial institutions visibility and operational control over their payments business. A modular component of the Volante Payments Platform, the solution is designed to enable banks to better understand their payments operations, simplifying decision-making while improving business performance. 

The solution addresses the increasing volume and complexity of the payments landscape, driven by the proliferation of real-time payments, the adoption of ISO 20022, and the digitisation of payment flows. The offering harnesses historical and real-time payments data, delivering actionable intelligence that helps banks strategically plan, optimise operational efficiency, and accurately track performance.  

As noted in the 2024 Corporate Banking IT Pressures & Priorities report from Celent, 60% of banks plan to increase migration of business-critical applications to the cloud by the end of 2025. Payments modernisation now ranks as a top priority for corporate banks globally, signifying the need for solutions that provide intelligence across stakeholder viewpoints, streamline modernisation efforts, and simplify operations. 

Volante plans to continue its innovation drive within Payments Intelligence through the addition of advanced dashboards to provide operators, managers, and executives with a more complete view of their payments business. By adding exception management, payment controls, and new AI-driven capabilities, financial institutions will be able to monitor and identify market dynamics more effectively.