The US payments landscape saw some course changing moments last year. The CFPB’s Section 1033 set new standards for financial data sharing, altering how banks interact with fintechs, while FedNow’s instant payment network gained steady adoption celebrating its one-year anniversary. AI emerged as a game-changer in payment processing and fraud prevention, and more banks are racing to meet ISO 20022 standards. With the Trump administration taking office this year in the US, many of last year’s regulatory initiatives could face changes as financial institutions continue to navigate payment modernization. Here’s what to expect:
Open banking’s regulatory evolution
Open banking will enter a new phase in 2025 as the CFPB’s Section 1033 rule takes hold. Despite legal challenges from banks and the new administration, the rule’s Dodd-Frank foundations and widespread API adoption suggest it will persist, though there may be greater security-focused refinements. As major payment providers like Apple Pay and PayPal fall under the rule’s scope, the industry’s focus will shift to balancing mandatory data sharing with fraud prevention, while banks adapt their API systems to this new competitive landscape.
AI reshapes payment operations
AI will continue to transform the payments industry through faster and more efficient operations like fraud detection, payment processing, and customer service. However, only those institutions with modern infrastructure in place will benefit from more advanced models while those with legacy systems will fall behind and continue to see limitations. While the new Trump administration has signaled less favor for strict AI regulations, it’s still possible to see increased regulatory scrutiny around AI in payments, particularly regarding bias detection and consumer protection.
FedNow continues growth trajectory
As the financial industry gears up for the ISO 20022 upgrade for cross-border payments and domestic systems like Fedwire, many institutions face challenges meeting this year’s deadline. Integrating legacy systems remains a significant obstacle for banks. To address this, numerous banks and credit unions are transitioning to ISO 20022-native payment processing on a unified platform for all payment rails, leveraging efficiency and cost savings through smart routing to the most efficient rail.
ISO 20022 adoption challenges
As the financial industry gears up for the ISO 20022 upgrade for cross-border payments and domestic systems like Fedwire, many institutions face challenges meeting this year’s deadline. Integrating legacy systems remains a significant obstacle for banks. To address this, numerous banks and credit unions are transitioning to ISO 20022-native payment processing on a unified platform for all payment rails, leveraging efficiency and cost savings through smart routing to the most efficient rail.
RTP sees unprecedented growth
After 2024’s market correction, BaaS will enter a more mature phase. Surviving providers will emphasize sustainable business models over rapid growth. Banks will be more selective with BaaS partnerships, prioritizing providers with strong compliance frameworks and proven revenue models. The sector will shift from pure-play BaaS to embedded finance solutions that offer clear value propositions.The US payments landscape in 2025 faces a period of regulatory recalibration as the Trump administration reviews key initiatives, particularly the CFPB’s recent rules. While FedNow’s instant payment network and the ISO 20022 migration deadline remain industry-driven priorities, the regulatory framework around open banking and AI in payments could see significant shifts. Banks must navigate this uncertainty while continuing their modernization efforts but may need to remain flexible in their approach as policy changes unfold. Success will depend not only on choosing the right technology partners and platforms, but also on maintaining adaptable strategies that balance innovation with compliance and are flexible enough to adapt with potential regulatory changes.Curious about how these trends shape payments strategy at your financial institution? Get in touch with us!
Banking-as-a-Service to see a reset
After 2024’s market correction, BaaS will enter a more mature phase. Surviving providers will emphasize sustainable business models over rapid growth. Banks will be more selective with BaaS partnerships, prioritizing providers with strong compliance frameworks and proven revenue models. The sector will shift from pure-play BaaS to embedded finance solutions that offer clear value propositions.The US payments landscape in 2025 faces a period of regulatory recalibration as the Trump administration reviews key initiatives, particularly the CFPB’s recent rules. While FedNow’s instant payment network and the ISO 20022 migration deadline remain industry-driven priorities, the regulatory framework around open banking and AI in payments could see significant shifts. Banks must navigate this uncertainty while continuing their modernization efforts but may need to remain flexible in their approach as policy changes unfold. Success will depend not only on choosing the right technology partners and platforms, but also on maintaining adaptable strategies that balance innovation with compliance and are flexible enough to adapt with potential regulatory changes.Curious about how these trends shape payments strategy at your financial institution? Get in touch with us!
