Your 'ins and outs' list for ecommerce payments in 2025

This time of year, your newsfeed and inbox is probably bursting with predictions for the year ahead. But what does this mean for the direction of the payments world specifically? And — even more importantly — what should you be leaving behind?

2025 is going to be a year of change for payments, driven by both consumer and merchant demands– so what's in and what's out?

What’s in?

Feel-good customer experiences without the spiralling costs

This is a given, right? Sadly not. For too long there’s been a misalignment between giving customers what they want, and merchants’ willingness to pay the price. What should be a given, however, is a feel-good shopping experience.

A frictionless, joined-up customer experience went from a nice-to-have to a non-negotiable more than a few years ago, and failing to provide this has a real knock-on effect for merchants’ revenue targets. Customers, like elephants, never forget, and 75% of customers admitted that slow or frustrating payments will have them abandoning their purchase to try elsewhere.

Post-payment experiences similarly affect brand reputation and this customer expectation is sure to be upped the priority list in 2025– with 97% of ecommerce merchants saying instant refunds will increase the likelihood of a consumer shopping with them again. No instant refund? For many customers today, this is justifiable grounds for seeking out a competitor next time.

So how can payment leaders provide a payment experience their customers actually enjoy while preventing payment fees from spiralling out of control? While soaring card fees continue to provoke an emotive response from payment leaders, Pay by Bank is the option on a mission to eliminate the fees causing the fury. Spoiler alert: arbitrary fees are definitely out this year– you’ll see why in the ‘what’s out?’ section below.

The ‘what’s in it for the customer?’ mindset is in

Customer incentives are a significant driver for the adoption of Pay by Bank in the UK and EU, from cashback rewards, giving back to the environment, to loyalty points. To change your customers' paradigm, a tangible reward in their back pocket is a strong option.

But how do we know these incentives work? Well, according to the change at the checkout 2025 report, in collaboration with Juniper Research, 57% of shoppers say receiving a reward for purchasing would influence their payment choice, while 53% say they would be more likely to try an alternative if “the benefits of the payment method are explained.”

With customer incentives and education coming out on top for encouraging new payment adoption, here’s a couple of examples of effective checkouts for inspiration:

When we think about educating customers on the benefits of Pay by Bank, it’s important to keep it short, to not overwhelm, but lead with the main concerns a shopper may have at this stage in their journey, i.e. what’s in it for them? In other words, answering these questions about Pay by Bank: Is it easy to do? How long will it take? Is it safe for me? The ‘what’s in it for the customer’ lens can equally be applied with monetary awards and for TrueLayer customers, remains the strongest option for Pay by Bank adoption.

Keeping tabs on payment policies is a must

Open Banking first hit the EU in 2015, and the UK incorporated it shortly after, in 2017. With this in mind, Pay by Bank is new(ish), disruptive and changing the way the world pays. Like with any other scaling technology, it's crucial that payment and ecommerce leaders keep tabs on policies that dictate key breakthroughs in Pay by Bank adoption in your region.

Last year saw significant progress in payment policies and TrueLayer was delighted to see open banking recognised as a key pillar of the UK’s payment strategy. After a long wait, the National Payments Vision set out exactly what we were hoping to hear:

“The [UK] government's ambition that seamless account-to-account [aka Pay by Bank] payments are developed as a ubiquitous payment method [..] enabling consumers to pay for goods and services in shops and online directly from their bank account.”

“Open Banking, with its significant untapped potential, has a vital role to play in achieving this ambition in the near-term – in particular, through unlocking account-to-account payments for e-commerce.”

With this welcome support from the Government we’re sure to see developments that further boost Pay by Bank this year, so it’s important to stay informed. You can subscribe to our newsletter at the bottom of this page to stay ahead of the updates you need to know about.

Instant payments are truly ‘blink and you miss them’ experiences

Another success metric for a payment experience your customers love, is a speedy one. Consumers are now accustomed to the instant, single-click experience possible in dedicated apps using stored payment details. We know that entering payment details is a common pain point, with 59% of customers feeling this to some extent within their ecommerce experience.

Losing customers at the final hurdle hurts the most. So, how will speed be baked into the payment strategies of 2025? Well, at the back end of last year the Instant Payments Regulation (IPR) came into force, laying out EU-wide rules that make instant payments ubiquitous in the EU (in the same way as they are in the UK, with faster payments). This is a welcomed requirement that lessens charges on consumers.

By 9th January 2025, all eurozone banks must offer their customers the ability to receive instant euro payments and reduce instant fees to whatever they charge for non-instant. By 9 October 2025, all eurozone banks must then offer their customers the ability to send instant euro payments, and introduce the Verification of Payee service, free of charge for all end users.

This regulatory push on instant payments is echoed in Mckinsey’s 6 payment trends for the next five years, as instant payments are viewed as paramount to displacing cards, predicting that “the number of instant-payment transactions in the European Union will increase from around three billion today to almost 30 billion by 2028, an average annual growth rate of 50 percent.”

So we know why customer-first strategies, incentives and the spread of payment regulations will be key to new opportunities this year, but what do we need to leave behind in 2024 to ring-in our new strategies? Or, put another way, what’s out?

What’s out?

Fees, fees, fees are out out out

Thanks to our spoiler above, you’ll have seen this coming.

You don’t need to look far back into 2024 to find a common thread for ecommerce merchants: fee fatigue. We’re talking chargebacks, merchant service charges, payment gateway fees, authorisation fees, swipe fees, the list goes on. Despite efforts by regulators, the PSR found that over the past five years, and after taking account of volume changes, Mastercard and Visa have increased their scheme and processing fees by more than 30% in real terms. Unfortunately, there’s little evidence that the quality of service has improved at the same rate.

For those couple of long-standing players dominating the card payment market (and enjoying a brow-raising 50% profit margin), things are coming to a head in a very public way. What’s more, with the US Senate scrutinising the effective tax on merchants and the scale of resulting profits, reputational damage has already affected sentiment for the future of card payments.

So, what’s the damage? On average, merchants can expect to pay between 0.4 and 3.4% of each transaction’s value in overall fees, with little doubt this is hurting merchant’s bottom lines. While fees alone are one thing, total cost of ownership is another and merchants are hurting from more than just fees. The cost of chargebacks, fraud and failed payments as a result of the ‘plastic’ era of cards, feels never ending for merchants today, and unsurprisingly change is needed.

The advice for merchants is to start by reconsidering pricing models and negotiating these fees (and know it’s your right to do so). But if these options don’t sit right with you, it may be time to research alternative methods. An advantage of Pay by Bank at the checkout is the merchant’s ability to re-invest new margins from lower cost options, rewarding customers with those savings to keep them coming back.

Say goodbye to sitting on the fence– 2025 is about action

A year ago, we asked ecommerce and payments leaders where they were on the product adoption curve– showing either innovators, early adopters, early majority, late majority or laggards within product innovation. When we think about Pay by Bank, we’re at a stage today where the early adopters have already adopted, and open banking is heading towards being mainstream in the not so distant future. The window for getting first (or just second) mover advantage will soon close.

While the US have their own fair reasons for being less interested in open banking due to the heavily embedded card culture, even Silicon Valley’s venture capitalist Bill Gurley sees Pay by Bank in the future of payment innovation. After labelling the payment system in the US “broken” on a podcast with Brad Gerstner, Bill put forward his reasoning for Pay by Bank:

Between ACH making “no sense whatsoever in 2024”, and Visa and Mastercard’s operating margins working against the consumer’s best interest, Bill predicts Pay by Bank is on its way to positively disrupt American soil.

So with the competitive advantage already being set, and brands like Ryanair, Lastminute.com and Just Eat reaping the rewards, there’s zero benefit to being slow off the mark this year.

Card rails are out, and bringing them down is a merchant’s mission

While we know difficulties at the checkout such as payment failure and complex checkouts affect cart abandonment, insufficient payment options affect drop off too. The benefits of choice at the checkout are widespread, but it’s important to note that many alternative payments at checkout are still built on top of card rails that prevent payment.

Many buy now, pay later (BNPL) offerings, along with mobile wallets like Apple Pay and Google Pay, are still fundamentally card payments. They don’t prevent the customer from jumping out of bed to find their debit card during payment. They don’t stop buyers from leaving their in-app payment to update their Apple Pay details after an unexpected card expiry.

This is why ecommerce giant lastminute.com saw Pay by Bank spike during the Crowdstrike outage, when other ecommerce sites were experiencing nothing other than a disaster for their business. Taking away card rails solves a real consumer issue, and it’s what Pay by Bank is here to do.

With all of this in mind, the time for change is here– adding alternative payment methods to your checkout is your competitive advantage. To find out more about the key consumer trends shaping the payment landscape, you can read the Change at the checkout report 2025 here.