In a preview of an upcoming Mastercard report set for early 2025, executives at the card processor indicate that generative AI is becoming vital for increasing fraud protection rates by as much as 300%.
In today’s digital economy, there’s a significant need for trusted interactions and seamless transactions. Mastercard predicts that by 2030, consumers will likely no longer need to use physical cards or enter passwords for online transactions, thanks to advancements in tokenization, biometric authentication, and digital wallets. Here are ten trends that could shape payments in 2025 and beyond:
1. AI Fraudsters Will Need to Be Outsmarted by AI
Criminals are already exploiting generative AI to create deep-fake videos and targeted phishing messages to steal money or personal data. Financial services companies will begin training AI models to identify and neutralize these threats in real time. Generative AI will be employed to analyze vast amounts of data quickly, predicting the authenticity of transactions and potentially enhancing fraud protection rates significantly.
2. Small Businesses Will Need Bigger Toolboxes
The businesses that thrived during the COVID-19 pandemic were those that embraced digital payments and e-commerce. Moving forward, small businesses need access to digital tools and services that were previously out of reach. By utilizing centralized platforms tailored to their needs, they can automate administrative tasks and develop personalized marketing campaigns informed by data-driven insights.
3. Digital Wallets Will Be Connected to Cards
Although digital wallets serve as convenient alternatives for banking, a common challenge remains: connecting these wallets to traditional card-based payments for international consumers. By 2025, cardholders should be able to link credit or debit cards to local digital wallets, eliminating the need for prepaid accounts.
4. Passkeys Will Gain Momentum
Secure identities will facilitate user interactions across various platforms, enhanced by biometric technology and machine learning. Passkeys, which enable passwordless authentication through biometrics, will play a key role in streamlining identity verification in sectors like healthcare and public services.
5. Businesses Will Realize the Benefits of Virtual Cards
Temporary, randomly generated card numbers linked to funding accounts will become more common in corporate payments. Virtual cards offer automated reconciliation, reducing human error and enhancing real-time data insights, thus allowing companies to manage spending more efficiently.
6. Contactless Payments Will Increase
Contactless payments already account for more than two-thirds of in-person purchases on the Mastercard network. Technologies like Tap on Phone are making it easier for merchants to accept payments simply and quickly, streamlining checkout processes as physical and digital experiences continue to blend.
7. Real-Time Cross-Border Payments Will Become More Seamless
Real-time payments are increasing consumer options, and as countries link their systems, cross-border transactions will become smoother. Increased interoperability is anticipated between real-time payments and other payment forms, such as CBDCs and digital assets.
8. Silos Will Be Eradicated
Collaborative partnerships will enable the co-creation of solutions and drive large-scale innovation among financial institutions, corporations, governments, and fintech firms. This trend is expected to persist, promoting efficiency and enhancing customer experiences.
9. Blockchain Will Enhance Speed, Security, and Efficiency
Blockchain and digital assets have shown great potential to transform global finance and commerce. As cryptocurrencies, stablecoins, and tokenized assets move from concept to commercialization, blockchain technology will be increasingly utilized for business-to-business and commercial payments by 2025.
10. Manual Card Entry Will Be Eliminated by 2030
The potential of tokenization goes beyond just card payments. This technology could allow consumers to share shopping habits and preferences with merchants on digital platforms, leading to more relevant offers and discounts while protecting personal data.