By Thekla Pachali, CTO, payabl.
Innovation in the payments industry is fundamentally shaped by the dynamic interplay between consumer expectations, technological progress, and the rapidly evolving regulatory environment.
At the very forefront of this definitive blend is growing consumer demand for convenience. In fact, six in ten (60%) respondents to our recent industry survey identified it as the most critical driving factor propelling innovation forward.
This highlights a universal truth: consumers now expect payments to be as fast, seamless, and intuitive as the other digital experiences shaping their lives. Meeting these expectations isn’t simply about keeping pace with your payments peers – it’s about creating standout experiences that foster long-term loyalty and trust amongst your customers.
Technological advancements, cited by more than half of respondents (53%), are the core enabler of this convenience.
From a proliferation of real-time payment systems to enhanced data analytics, technology is moving at breakneck speed and unlocking exciting new opportunities for businesses to innovate and shift the dial in terms of customer experience.
A need for viable use cases
However, successful adoption requires a clear focus on solutions that address real-world challenges rather than adopting shiny new technology for its own sake. Yes, technological advancements are exciting, but they must be pursued with purpose. It’s all about carefully choosing solutions that genuinely enhance the customer experience or operational efficiency.
If you are harnessing the latest developments in Generative Artificial Intelligence (Gen AI), for example, then why are you adopting it? How exactly does it enhance your customer journey? And have you considered the potential pitfalls, such as the technology’s tendency to sometimes hallucinate and give nonsensical answers, or the underlying biases in the data used to train a model that can be reflected in its conclusions. Such concerns are at the heart of the EU AI Act, which came into force in August 2024 and impacts payments companies and merchants alike.
Talking of regulation, regulatory changes were noted by 50% of respondents as both a driver and a challenge when it comes to successfully implementing innovation.
Harnessing new regulations to build trust
Whilst regulation often gets a rather bad reputation for creating hurdles it’s also a powerful driver of innovation. As standards continue to evolve, businesses must adapt and avoid resisting these changes, and instead see them as a means of differentiating their proposition.
Shifting regulations around areas like AI, cybersecurity, and fraud prevention will continue to push the world’s businesses to rethink their strategies. For the more forward-thinking organisations, these changes offer new opportunities to build trust by staying ahead of the creeping compliance curve.
Other drivers identified in our survey - such as security enhancements (39%), cost reduction (30%), and competition from new market entrants (19%) - reflect the multifaceted nature of innovation in payments. Balancing these priorities is essential for businesses looking to lead the charge in creating more efficient, secure, and consumer-centric payment systems.
Ultimately, true innovation only happens when all these forces align.
Companies that can find the sweet spot of consumer-centric design, smart technology investments, and proactive responses to regulation will not just survive but thrive in the next wave of payments evolution.
The payments industry is evolving at an unprecedented pace. For further insights, check out our 2025 Commerce and Payment Trends Report, which uncovers the trends and innovations that will define 2025 and help you to navigate the future of payments and commerce.