Things move quickly in payments, a sector bridging the already pacy worlds of finance, technology and commerce.
Payments professionals are on the frontline here, dealing with millions of customers and transactions every day, across every conceivable consumer segment.
But what does 2025 hold in store for those working in the space, and what trends might be emerging that will have the greatest impact on the industries payments looks to serve?
In this report, we spoke to clients, partners, influencers and our own leaders to hear what they believe are the most important things already happening, what to look forward to and what to look out for.
- Business payments catching up with consumer payments
- UK accelerating back into payments innovation
- Embedding payments and pay-outs into vertical-agnostic SAAS
- Merchant Payments falling into the ‘Innovation Gap’
- Monetising efficiency by making small gains into big pay-offs
1. Business payments catching up with consumer payments
Hyperlayer head of enterprise sales, Tanya Dyke
"Recently, consumer payments were leading the charge with tech developments and convenience-driven innovations. This included the adoption of digital wallets, contactless payments, alias payments and real-time transfers.
"B2B payments haven’t always been so quick to innovate, often because of complex internal systems and processes. For example, accounts receivable and payable processes can be manual, or integrated into ERP, accounting, and treasury platforms, making changes to payment methods cumbersome and time-consuming.
"However, the landscape is changing. Tech advancements and shifting consumer expectations are driving a new wave of B2B payment innovation.
"Adoption of real time payments that can create differentiation for end users and competitive advantages for the businesses is now being seen across multiple industries – such as paying a gig economy worker immediately post-delivery versus at the end of the month, or paying an e-commerce vendor immediately post-shipping.
"Integration of payments into platforms has improved engagement for businesses and allowed new revenue streams, such as accounting platforms implementing payment capability into their software.
"We are still in the early stages of adoption for embedded B2B payments, even though the use cases are clear and business cases strong. We’ve got to acknowledge that while embedding financial services and payments into platform offerings has the potential to increase customer engagement, create new revenue streams and protect against customer churn, these are ‘adjacent’ services and most non-financial businesses are not familiar with commercialising payment capabilities. This can slow down investment decisions and therefore adoption.
"It's notable too that in business payments there’s not the requirement for frictionless customer experiences. It’s important sometimes to have the friction, which makes us stop and think about what we’re doing."
2. UK accelerating back into payments innovation
The Payments Association Director General, Tony Craddock
"Dump pessimism, embrace optimism – we’ve been grumbling about excessive regulation, power-hungry regulators, lack of direction and excessive competition for some time. Now we have a National Payments Vision, a government that supports lighter regulation and even tougher anti-fraud regimes than other countries."
"That should mean that, in 2025, the UK will walk tall again, invest more and take risks associated with being world-leading.
"The UK should bring the problem-solvers inside the tent when it comes to making far-reaching decisions around payments. In 2025, that should mean that technology companies and marketplaces will be brought within the regulatory perimeter to prevent fraud. This will plug the holes in the bucket so that no reimbursement is needed.
"Another focus should be striking a better balance between regulation and risk. With the PSR’s new ‘second objective’ of promoting innovation, in 2025 we will see the relationship improve.
"Next, with new governance at the Financial Ombudsman Service, a restructured payments architecture, the merger of pay.uk and Open Banking Ltd, as well as the demise of JROC and increased capital requirements for EMIs, our industry will deliver controlled, efficient and effective growth with a strong ROI for investors and adequately protected consumers."
3. Embedding payments and pay-outs into vertical-agnostic SAAS
Flagship partner, Erik Howell
"There's been a lot of fintech activity around B2B payments but when you look at the raw numbers, the vast majority of transactions is still going through banks. That’s because businesses need more functionality than consumers, but that functionality is expensive and complicated to build.
"What we have as a result is a universe where if you're in a medium-sized business, you can go with a traditional bank, which will be super clunky, or a fintech that may be light on some features and functionality, with few happy middle grounds.
"However, what that means is a lot of opportunities for providers to fill that space.
"One particular area where there's been huge uplift and monetisation is embedded pay-ins and pay-outs. There's been rapid advances by big, premier American software-as-a-service (SAAS) platforms – beyond simply commerce – monetising pay-ins, but I think the next frontier is monetising pay-outs.
"If you think about how a large business operates, each vertical may have two-to-three software-as-a-service solutions in a country or region, with each solution important enough to act as its own enterprise resource planner (ERP). Businesses use these platforms every day, literally tracking receivables and payables and ordering inventory, so they should be able to pay out from the platform too.
"However, when we did an informal study of the top five software platforms in the US by vertical, we found that actually very few have embedded pay-outs, and that, we think, is a massive opportunity."
4. Merchant Payments falling into the ‘Innovation Gap’
Modulr Founder and CEO, Myles Stephenson
"Payment services forms a lynchpin at the intersection of finance and commerce, but rather than that importance boosting its profile, its intermediary role means its essential support for our daily lives often goes unnoticed.
"What’s particularly interesting about that is that a diminished focus appears to be emerging around merchants’ capabilities going forward.
"Having dealt with so much change over the years, whether that’s the battle between online and offline retail, adjusting to new buyer preferences or simply downward pressure on costs, merchants and payment providers may feel they can weather any further change. However, Modulr research, to be released in 2025, suggests they may want to reconsider.
"That research, among 250 leaders within UK merchant and payment businesses. seeks to understand how market forces from above and below are shaping their businesses.
"What we’ve found is that, despite high pressure from merchants for new payment methods and expanded services, alongside significant concerns about ecosystem friction and changing consumer behaviours, businesses are not upweighting their payments budgets accordingly.
"Nearly three-quarters of respondents believe the pace of innovation could leave their business behind in the next three years, but with only 10% investing significantly in innovation, organisations may want to refocus their efforts before they fall into the innovation gap."
5. Monetising efficiency by making small gains into big pay-offs
PSE managing director, Chris Jones
"Historically the payment pain points in the consumer world appear when moving money between A and B, with no ongoing relationship between the consumer and the merchant. Those one-time interactions require things like proxy credentials and relationships, and that brings difficulty.
"In the B2B world, meanwhile, the pain doesn't really come from the payment. Instead, it comes from the information around the payment.
"If you are a small business on an online banking tool, paying to existing payees, you don't need Open Banking or variable recurring payments, card payments, or indeed much else. These payments can be very, very low cost and they are low margin work for payments companies.
"However, when it comes to the wider information and the delivery of the good or the service, reconciliation or financing, there is a dispersed pain that is less easy to see. That extra effort and difficulty falls into accounting. It falls into procurement. It falls into a whole different set of ranges, which makes it hard to propose a clear business case around enhancing any single one.
"While we don’t see a sea change around the cost and functionality issues on payments, we do see things beginning to change on the data side, with a lot of opportunity within SAAS.
"Whether it's through ERP and ledger integration, or better insights on the life cycle of a payment, or the buyer and the seller sitting on some sort of vertically integrated platform, I think what's going to happen is a much closer alignment between the provision of information and data and the provision of payments.
"We have already seen that accelerated in the B2C world with the likes of Shopify, but we haven't had lighthouse examples in the B2B world in quite the same way. So, the interesting events that will happen in 2025 will be that those B2B use cases accelerate through the software ecosystem."
Not sure what's next for your payments?
If you don't know what the year ahead might have in store for your business, speak to one of our payments specialists to see how faster, automated or more efficient payment capability could make the difference for you.
