Breaking Down Payment Technology Trends for 2025

Dive into the future of payment technology with KUBRA's latest research findings. In this comprehensive exploration, we uncover the evolving landscape of bill payments, from the continued dominance of traditional methods to the rising influence of digital innovations. Keep reading for fascinating trends about security preferences, digital wallet adoption, and the potential of emerging payment technologies.

Listen to the full podcast episode or read the detailed transcript below to discover how these trends could impact your business strategy and customer experience in 2025 and beyond.

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Shaun:

Welcome to Experience Better, The CX Podcast by KUBRA. I’m your host Shaun Jackson, Senior Vice President of Marketing at KUBRA. Today, we're using a different format for the podcast to bring you insights from KUBRA's recent research on emerging payment trends and the bill payment experience. 

Earlier this year, KUBRA surveyed over 1,000 consumers to gauge the rapidly changing payments landscape. We recently hosted a webinar to explore these findings, and today I’d like to share some key highlights from both the research and that discussion.

Let's begin by taking a look at what's driving customer satisfaction - or rather, dissatisfaction - with their current payment experiences. Here’s what Yara Alatshan, Partner Marketing and Market Intelligence Lead at KUBRA had to say. 

The Current State of Bill Payment Satisfaction

Yara: 

There's mixed feedback on the bill payment experience. In general, customer satisfaction levels hover around 50%. Specifically, 51% are very satisfied with the payment channels.

52% are very satisfied with the variety of payment methods, and 49% with the ease of payment experience. In general, these are good satisfaction levels, but, of course, as you see, there's some room for improvement.

Security has the lowest ratings, with only 44% who are very satisfied with the security of their payment experience.

The takeaway here is that there's a clear opportunity for billers to enhance and improve satisfaction levels across the board. If we zoom in, as we said, security has the lowest ratings, so it makes sense to start from there.

 The easiest and most efficient way to improve satisfaction levels is by simply communicating the security measures you take to ensure that your customer's payment information is safe.

Shaun: 

Those satisfaction numbers tell us something important. While we're seeing decent satisfaction across payment channels and methods, that 44% security satisfaction rate is a red flag that billers can't or at least shouldn’t ignore. It's worth noting that this trust gap could be affecting how customers choose to pay their bills. So we need to examine which payment methods customers are actually using and understand their reasons for these preferences. 

Digital Wallets vs. Traditional Payment Methods

Yara: 

Debit and credit cards are customers’ go-to payment choices.

They are still the most popular payment methods with 75% preferring credit cards and 71% preferring debit cards. Cash, bank transfers, and checks follow closely, which shows that customers still rely on traditional payment methods.

Digital wallets are starting to catch on with PayPal leading the pack.

Some of you might wonder how customers decide on which payment method to use. 

According to our research, the key drivers of payment preferences are security, convenience, and speed. 66% view security as a top factor, 48% see convenience as a top factor, and 31% consider speed as a top factor. These are the primary drivers, but we still have some secondary ones.

Shaun: 

This is interesting. Though the data still shows that debit and credit cards are the overwhelming favorites, digital wallets are starting to gain traction as well.

So what's driving this shift toward digital wallets? As Ben Murphy, KUBRA’s Director of Strategy and Transformation, explains, it largely comes down to the unparalleled convenience and ease of use offered by digital wallets, which have become pivotal in modernizing and streamlining customers’ payment experiences.

Building Customer Trust Through Payment Security

Ben: 

Digital wallets have been around for a number of years, beginning with PayPal back in the early 2000s, and now you've got a whole wealth of competing wallets from the likes of Apple, Google, Square, and Cash App.

Paze is another recent one that was launched by the largest banks in the U.S.

Overall, the goal of these digital wallets is to provide the same capabilities and same functionality as a physical wallet, but with a superior user experience.

Within a bill pay setting, offering digital wallets allows consumers to pay the bills at the moment of intent, right? Meaning, that as they're viewing their bill likely on their phone, they can make the payment immediately without having to get up from the couch or wherever they are, to grab a credit card or a check, to complete the payment. It makes it easy and seamless to make that payment as they're viewing the bill, Also, it can drive payments to be made more quickly and drive down day sales outstanding (DSO) for our customers.

Shaun: 

This clearly shows that many consumers are prioritizing the seamless, on-the-go experience that digital wallets provide. The ability to quickly and securely make payments without having to fumble with physical cards is a major draw. And as customers get more accustomed to using digital wallets in their everyday shopping, that familiarity and convenience carry over to bill pay as well.

Of course, not everyone has fully bought into digital wallets yet. So let’s hear what Ben has to say about some of the key barriers holding back wider adoption.

Ben: 

If we look at what stops customers from using digital wallets, the top reason actually is security, with 33% saying it is the main reason they do not use a digital wallet. So, again, while digital wallets are generally more secure than physical cards due to tokenization and multifactor authentication, your customers don't always understand this. The way to drive adoption is to educate customers on those benefits, being very clear about the security benefits, and why it's improved from using physical cards.

Shaun: 

Despite the enhanced security features digital wallets provide, obviously customers aren't always aware of the benefits. There's also often an inherent tendency to stick with the familiar, which in this case is traditional payment options.

Overcoming these hurdles will be crucial for billers looking to drive higher digital wallet usage. As Ben suggests, focusing on targeted education, particularly highlighting the enhanced security offered by digital wallets and onboarding support could go a long way.

Of course, digital wallets aren't the only emerging payment trend making waves. Let's shift gears and explore another area that's captivating customers - real-time payments. 

Consumer Demand For Real-Time Payment Processing

Yara: 

65% of customers are willing to choose a bill payment method that offers real-time processing over traditional methods.

If you recall, when we talked about the key drivers of payment preferences, we said that convenience, security, and speed are the top drivers. The second customers discover there's a payment method that is faster, they will automatically make the switch.

The takeaway here is that you need to be prepared to offer real-time payments once available as customers are eager for instant transactions.

Shaun: 

The data Yara shared really emphasizes customers’ incredibly high expectations regarding payment processing speed. Billers who can deliver on this need for speed are poised to have a significant advantage.

Speaking of emerging payment trends, let's discuss another that's been generating a lot of buzz - buy now, pay later, or BNPL. KUBRA’s research shows that 47% of customers are interested in using it for bill payments – but listen to the next clip, as Yara explains why buy now pay later can be a double-edged sword. 

The Growing Impact of BNPL in Payments

Yara: 

This is entirely expected during challenging economic times and high inflation. These are all factors that contribute to customers' interest in buy now, pay later. Usually, in harsh circumstances, we look for ways to ease our financial burden, and it's applicable for bill payments as well.

The thing with buy now pay later is that it's a double-edged sword. On one hand, it does provide customers with the flexibility they need to manage their bill payments and ease their financial burden. But at the same time, the staggered payment schedule, especially if customers are dealing with more than one bill, could lead to missed payments or even late fees.

The takeaway is if you are considering offering buy now, pay later for your customers, it's very important to implement that carefully and clearly communicate the payment schedules and any potential late fees.

Shaun: 

The appeal of buy now pay later is obvious when you think about it from an economic perspective. When times are tough, it gives consumers more flexibility and control over their finances. However, Yara is right to suggest that billers need to exercise caution and provide transparent communication around any BNPL offerings. This approach is crucial to building customer trust.

One payment trend that doesn't seem to be resonating quite as strongly is cryptocurrency. While 81% say they’ve heard of cryptocurrency, many are unwilling to use it for bill payments. Let's hear Ben's take on why that is. 

Understanding Barriers to Cryptocurrency Adoption

Ben: 

When we ask people if they would be more likely to use crypto if more service providers accepted it, as we are slowly seeing more acceptance across online payments in general, 35% are more likely to use crypto, 42% are just not going to use them, and 23% aren't sure. So there is some interest, but generally, it appears consumers are pretty skeptical. You know, if you think about it, the market has gone through a rough patch over recent years dealing with everything from market volatility, corporate bankruptcies, FDX blow-up, and various legal battles, and the public confidence has really been hit. And so until these problems are sorted out, it's unlikely we'll see widespread adoption anytime soon.

Shaun: 

The bottom line seems to be that while crypto may have long-term potential, it doesn’t need to be a pressing priority for billers at the moment. The more immediate focus should be on optimizing the traditional and emerging payment methods that customers are actively gravitating toward.

Preparing Your Business for 2025 with Smart Payment Strategies

This research from KUBRA paints a fascinating picture of the evolving payments landscape. While traditional payment methods like cards still reign supreme, newer options like digital wallets, real-time payments, and buy now, pay later are gaining serious traction.

The key for billers lies in offering a balanced mix of payment choices, while also prioritizing ease of use, security, and speed, which are the core drivers of customer preferences. Additionally, staying ahead of the curve will require careful monitoring of emerging trends and proactive education.

To dive deeper into KUBRA's findings, be sure to check out the full research report: KUBRA’s Emerging Payment Trends Research 2024. You can access it by visiting KUBRA.com under the Resources & Whitepaper section, or find a link in the episode description.