By JAMES CHENEVIX-TRENCH
The payments industry is undergoing transformation.
We are witnessing a shift from traditional banking models to digital-first, instant, and frictionless experiences for consumers and businesses. While these transformations have been anticipated for some time, it is only in recent years in the wake of the pandemic that we are able to see the true shape of this emergent landscape. Innovation has occurred across the industry forcing even the largest players like Visa to adapt, but as with all technological step changes it has been the smaller players who have led the charge. In this piece we will discuss the current landscape of global payments and draw attention to the most interesting developments.
How payments technology acted as a handbrake on ecommerce
In 1949, Frank McNamara found he had forgotten to bring his wallet to a New York restaurant. His wife was there to help but his inability to settle for dinner disturbed him. This incident inspired him to create the Diners Club card – the world’s first credit card, preventing Mr. McNamara future embarrassments. At the time, this was a dramatic innovative leap for US consumers, but the development of the payments industry itself since the invention of the credit card have not kept pace with other areas of rapid technological change.
That is until very recently. Today, change in the payments space has been so dramatic that it can be difficult to appreciate how clunky payments systems were. Before fintech companies took a central role, payments used to take days to process with bank transfers being notoriously slow. Credit card payments required complex processing networks which resulted in merchants racking up interchange fees. The reliance on batch processing and legacy banking infrastructure involved several steps, with transactions split into ‘batches’ and then submitted to banks at the end of each day. The batches would then be routed via payment processors, card networks, and then issuing banks such that settlement took several days. This antiquated architecture presented a barrier to faster adoption of e-commerce long after the proliferation of the internet. In the pre-Covid world credit card details had to be entered manually on buggy webpages; often the experience of attempting to pay for something online was so annoying that many consumers would rather visit a store.
According to several studies, cart abandonment issues accounted for as much as 20-30% of all abandoned carts prior to 2020 (or 14-21% of potential ecommerce sales. As recently as June 2024 Visa announced that they would be phasing out all manual entry of card details by 2030).
Today real-time payments systems (RTP rails) have replaced traditional infrastructure in every developed market. For example, UPI (India), Faster Payments (UK), PIX (Brazil), SEPA Instant (EU). The key feature of these systems is that they allow settlement and clearing of payments in mere seconds. There is certainly no waiting over weekends for a payment to clear. This eases a substantial choke point for both retailers and consumers alike. RTP rails also allow for account to account (A2A transfers) which eliminate interchange fees that would normally result from using a traditional payments network. It is these RTP rails that have enabled the global transformation in payments today.
RTP rails have been instituted across different territories by a combination of consortiums of private banks and government initiatives. With RTP rails now firmly in place, fintech companies have been enabled to enter the space and rapidly expand their services while traditional banks have followed their innovations. Today digital wallets saved on smartphones are fast replacing physical cards. Apple Pay Cash App, Venmo, Monzo, and Revolut to name just a few. The rise of digital wallets is set to continue becoming the preferred method in global e-commerce and POS systems as demonstrated in the chart below.
Source: WorldPay Global Payments Report 2025
The growth of digital wallets tracks closely with the rise in A2A transactions as a share of global payment volumes. This trend is charted below in key developing markets.
Source: WorldPay Global Payments Report 2025
The impact of A2A payments on e-commerce by country:
Source: WorldPay Global Payments Report 2025
Declines across high cash use markets point to the success of fintech even in traditionally conservative payment cultures.
Embedded Finance & Banking-as-a-Service (BaaS)
Regulatory regimes across major territories have come to accept the expansion of fintech solutions. Traditional banking licenses are no longer required to offer financial services in most cases except for institutions taking deposits. Today in most territories any company can embed banking and payments into their platform using fintech infrastructure.
Companies like Stripe, Marqeta, and Synapse offer Banking-as-a-Service (BaaS), allowing brands to create their own payment systems, debit cards, and even lending products. For example: Uber built its own financial ecosystem by integrating fintech APIs for instant driver payments and Uber Cash. Revolut began by partnering with licensed financial institutions to offer banking-like services without holding a traditional banking license itself. It leveraged partnerships with banks and payment processors to issue cards, facilitate international transfers, and provide e-money accounts under an Electronic Money Institution (EMI) license. This allowed Revolut to operate as a fintech platform while relying on the regulatory infrastructure of its partners, avoiding the need for a full banking license in its early stages. Over time, it has applied for and obtained banking licenses in select regions to expand its services. This model has contributed to the proliferation of fintech in the payments space.
B2B payments networks – the case of Adyen
Adyen, which is owned in the Cerno Future Strategy and the Cerno Global Leaders portfolio plays a pivotal role in the global payments revolution by offering a seamless, unified platform that significantly reduces friction in how businesses accept and process payments worldwide. Unlike traditional systems that relied on multiple intermediaries, Adyen provides an end-to-end infrastructure that combines gateway, acquiring, risk management, and data analytics in a single solution. This integration allows merchants to streamline operations, improve authorization rates, and gain real-time insights into payment performance. By supporting local payment methods across hundreds of markets and enabling omni-channel capabilities, Adyen helps businesses deliver faster, more consistent, and localized customer experiences.
Pushing the frontier
Across the world fintech companies are reshaping the payments landscape with innovative models like Buy Now Pay Later (BNPL), real-time payments, embedded finance, and digital wallets.
BNPL services, led by firms like Klarna and Afterpay, have gained massive traction by offering consumers flexible, interest-free instalment plans at the point of sale—blurring the lines between payments and credit. This has allowed both consumers and small businesses to break down payments into instalments and gain more flexibility.
Source: WorldPay Global Payments Report 2025
The BNPL landscape has rapidly evolved across different regions, adapting to local consumer behaviour and financial ecosystems. In Europe, Klarna continues to lead, expanding beyond its core markets with features like budgeting tools and a rewards program to deepen user engagement. In the US, firms like Affirm and Afterpay (now owned by Block) have gained popularity, especially among younger consumers seeking alternatives to credit cards. Meanwhile, in Brazil, companies like Mercado Pago and Nubank are integrating BNPL into their digital banking platforms, tapping into the region’s large unbanked population.
However, the sector faces growing challenges: rising interest rates make funding BNPL programs more expensive, regulatory scrutiny is increasing—particularly around consumer protection and credit checks—and competition from traditional banks entering the space is intensifying. The need for sustainable business models and responsible lending practices is becoming critical as the market matures.
The development of the BNPL universe and broader fintech innovation could also be impacted by macroeconomic shocks like the current trade war. New tariffs on imports—particularly from China or the EU which could trigger inflationary pressures in the US, raising the cost of goods and thereby increasing reliance on deferred payment options like BNPL. While this might initially drive user growth for BNPL providers, it also raises the risk of higher default rates if consumer financial stress rises in parallel. In the U.S., companies like Affirm might face tighter margins as both the cost of capital and consumer risk increase. In Europe and Brazil, where currency volatility and global supply chains are highly sensitive to U.S. trade policy, the ripple effects could be more pronounced—potentially slowing fintech expansion or pushing providers to revise their credit models. Thus, geopolitical and trade disruptions could add complexity to an already rapidly shifting payments landscape, testing the resilience of BNPL platforms and their path toward becoming sustainable, regulated financial institutions. It is notable that Klarna suspended their plans to IPO in the US following the Trump tariff shock.
While these businesses face challenges, they have achieved a dominance that looks set to remain a significant part of the payments landscape. Some believe that their ultimate destiny will be to become a full service digital neobank, as is the destiny of Revolut, Monzo and Chime. Nigel Morris, the founder of QED Investors, writes: “They’re all on a collision course, but the market is so big because the banks largely abdicated that segment.”
Payments in the developing world have led innovation
In developing markets like Brazil and across South America, fintech companies are transforming inefficient payment ecosystems by providing fast, low-cost, and accessible financial services where traditional banking has often fallen short. Brazil always had an expensive and inefficient banking system, but it is now a hotbed of financial innovation.
Brazilian company Nubank, for example, has revolutionized consumer banking by offering fee-free digital accounts, instant transfers via Pix (Brazil’s real-time payment system), and simplified credit products—all through a mobile-first experience that reaches millions of previously underserved users.
For businesses, startups like PagSeguro and Stone are modernizing point-of-sale (POS) infrastructure by replacing outdated systems with smart, affordable devices and digital dashboards that make it easier for small merchants to accept card and mobile payments. These innovations have drastically reduced reliance on cash, boosted financial inclusion, and enabled micro-entrepreneurs to formalise operations. Unlike in developed markets, where fintech often enhances convenience, in the developing world it solves existential gaps—like lack of branch access, high fees, or poor credit infrastructure. In rural areas, for example, fintech platforms are enabling peer-to-peer lending, QR-based payments, and mobile wallets without the need for traditional banking rails, creating entirely new financial lifelines.
Building on this transformation, other fintech innovators in Latin America are addressing deeply rooted structural issues with creative, localised solutions. Argentina’s Ualá, for instance, offers a mobile banking app linked to a prepaid Mastercard, allowing users to pay bills, make transfers, and access microloans—all without a traditional bank account. In Colombia, Rappi has expanded beyond food delivery into embedded finance through its RappiPay service, providing digital wallets and credit cards to a growing base of mobile-first users. These platforms are often designed to function even on low-end smartphones and in areas with limited connectivity, ensuring accessibility for the broader population. Meanwhile, in Brazil, the widespread adoption of Pix has enabled an entire ecosystem of startups to build payment layers on top of instant transfers—from ridesharing and gig platforms to informal vendors who now operate digitally for the first time. The impact is particularly profound for women and informal workers, who gain access to financial tools that support economic participation and mobility. These developments highlight how fintech in developing markets isn’t just about convenience—it’s about rewiring access to the economy and creating a new baseline of financial inclusion that leapfrogs the limitations of traditional banking systems.
The future of payments
Demographic shifts are playing a pivotal role in shaping the future of the payments and fintech landscape. Younger generations are digital natives with fundamentally different expectations from their financial service providers. James Spence’s recent Investment Letter makes this clear [click here to read].
Young consumers value speed, transparency, personalisation, and social responsibility over brand legacy or brick-and-mortar presence. Fintechs like Monzo, Revolut, and Cash App (Block) have captured this market by offering sleek, mobile-first interfaces, instant notifications, zero-fee models, and community-driven branding. However, as these users age and their financial needs become more complex—mortgages, long-term investments, family planning—fintechs face the challenge of evolving their offerings without losing the simplicity and agility that won over younger customers in the first place.
To retain loyalty as their customer base matures, new banking businesses must transition from being “cool alternatives” to becoming trusted life partners. This means expanding into holistic financial services—such as insurance, wealth management, pension planning, and business finance—while maintaining a frictionless, intuitive user experience. It also means deepening personalisation using data to proactively suggest financial strategies, products, or educational tools tailored to a customer’s life stage. Crucially, these firms must continue to invest in their brand identities—focusing on values like sustainability, inclusivity, and financial empowerment—which resonate deeply with younger users and can foster long-term emotional loyalty as those users grow older and wealthier. This will be a substantial challenge.
Moreover, the cultural and technological environments in which younger generations operate will continue to evolve. Social commerce, influencer-driven financial advice, decentralised identity, and embedded payments in everyday platforms may change what “banking” even looks like. The rise of gamified finance, community investing, and hybrid digital-physical experiences suggests that successful fintechs will need to remain both flexible and culturally fluent. As life moves increasingly online and financial expectations change with it, the most enduring fintech brands will be those that grow with their users—offering relevance, trust, and value at every stage of life, without losing their innovative edge.
Conclusion
The payments landscape has transformed. Traditional models of banking and card payments are being reimagined through mobile-first platforms, real-time transfers, embedded finance, and digital wallets. Fintech players like Revolut, Klarna, Monzo, and Block are no longer just offering alternatives to banks—they are building comprehensive ecosystems that combine spending, saving, investing, and credit within seamless digital experiences. As the line between banking, commerce, and technology continues to blur, these companies are positioning themselves as agile, user-centric challengers to the long-dominant networks like Visa and Mastercard. The rise of open banking, API-driven infrastructure, and increasingly sophisticated data analytics only accelerates this shift.
Looking ahead, one of the most intriguing frontiers is the integration of stablecoins and tokenised digital assets into mainstream payments. While crypto has struggled with volatility, regulatory uncertainty, and a lack of user trust, stablecoins—especially those pegged to fiat currencies—hold potential as a frictionless, low-cost, and cross-border medium of exchange. Projects like PayPal’s USD-backed stablecoin and Circle’s USDC are early attempts to bridge traditional finance with decentralised systems. However, challenges remain: regulatory oversight, consumer protection, and technical infrastructure will need to mature significantly before stablecoins can compete at scale with card networks or mobile payment apps.
These innovations are all part of a digitally-native economy— The next frontier of payments can be seen in gaming, virtual goods, and creator monetisation. Platforms like Roblox, Twitch, and Fortnite are normalising microtransactions and digital currencies among younger generations, creating new demand for flexible, secure payment tools that are native to online environments. This may pave the way for future businesses built entirely around in-game commerce, digital identity, and real-time financial interaction. As AI-driven virtual spaces evolve, we may see payments embedded into entirely new kinds of experiences—autonomous shopping agents, real-time collaborative finance, or streaming-based income models. The most promising areas will likely blend financial infrastructure with culture, technology, and personalisation. The transformation in payments is set to deepen as technology pushes us toward a more efficient future in our financial lives.
Sources: Bloomberg, WorldPay Global Payments Report 2025, Reuters, Financial times, Nubank, Adyen, Research and Markets – Global Payments Market Report 2025.
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