As we approach 2025, fintechs can expect to see some major developments led by the cost of living, government regulations, consumer preferences, AI and fraud prevention.
We’ve been involved in many of these developments and we’re excited for what lies ahead in the future.
In this article we’ve spoken with industry and academic experts and listed the top trends for fintechs to expect in 2025.
Fintech policies will be hot topics at the Australian federal election
2025 will be a federal election year in Australia, an event that has historically impacted fintech-related policies. We spoke to Rehan D’Almeida, CEO of FinTech Australia, who shared some fascinating insights on what normally happens during an election year and how 2025 could be different.
“Next year (2025) is an election year. Historically, that sees fintech-related policies give way to other major pieces of legislation that become election promises for the major parties.
However, with many of the sector’s hot issues tied so closely to cost of living, I think we can expect to hear a lot about surcharging and digital wallet policy. This is something we saw in the US election, where in spite of all the other matters affecting the country, crypto policy served as a major political sticking point in the race for the White House.”
- Debit card surcharges
The Australian federal government has announced that they’re willing to discuss the banning of debit card surcharges. “We are prepared to ban debit card surcharging from 1 January 2026, subject to the consultation undertaken by the RBA, and sufficient steps and safeguards to ensure both small businesses and consumers can benefit from lower costs….” (Prime Minister & Cabinet, 2024).
There has been a lot of public conversation about this topic. Consumers are feeling pressure from the rising costs of living and are seeking ways to reduce everyday expenses.
Businesses are also facing pressure from high inflation costs and have voiced concerns about absorbing these costs. The highly publicised move by Chemist Warehouse to roll out Pay By Bank QR code payments from early 2025 has no doubt made businesses look critically at their own payment methods.
Unfortunately surcharging and payment processing can be difficult for both businesses and consumers to understand. In an article by Ben Pfisterer’s for The Australian, Ben discusses how the focus should be on stopping excessive fees “Some of the proposed constructs that orientate around blanket bans on surcharges risk doing more harm than good, so instead regulators should increase enforcement of the current framework to stop excessive fees as the first step.” His article discusses the layering of additional service charges and merchants who surcharge more than their payment costs.
We’d love to see open discussions throughout 2025 between the government, banks and fintechs, business owners and the public, to review the impact of the proposed solutions and develop a solution that helps everyone.
- Digital wallet regulation
Digital wallets such as Apple Pay, Google Pay and WeChat Pay have grown rapidly in recent years, however these are not currently included as payment systems within Australia’s financial regulatory system.
The federal government has announced plans to update the Payment Systems (Regulation) Act 1998 to enable the Reserve Bank of Australia to regulate new and emerging payment systems such as digital wallets and “allow particular payment services or platforms that present risks of national significance to be subject to additional oversight by appropriate regulators.” (Australian Government, The Treasury, 2023).
The goal of this regulation is to ensure openness and responsibility, treating these wallets as financial organisations. Fintechs are expected to benefit from increased security measures, innovation opportunities and a levelling of the playing field. However fintechs may face costs in changing processes to meet new regulatory requirements.
Consumers, who have warmly embraced the use of digital wallets, would benefit from being able to pay with their digital wallets at more businesses, particularly for online payments. They would also feel reassured that these payments are safe.
Bridging of physical and digital payments
The bridging of physical and digital payments will continue to streamline in 2025 according to payments expert Tony McGrath, who has spent 20 years leading payment technology projects at Eway, Ezidebit, Global Payments, and now Novatti.
“In-person and online payments will continue merging together, allowing retailers to offer their customers a seamless omnichannel experience.”
- Embedded payments
This streamlining reduces friction for users, making transactions faster, simpler, and more efficient. We’re excited to see more widespread usage of embedded payments in apps, platforms and devices. Retailers will increase usage of platforms that integrate in-store and online payment systems, providing a more seamless experience for shoppers regardless of how they shop. “Retailers tell us that their physical stores and online presence are symbiotic…” (McKinsey, 2021).
- Internet of Things (IoT)
- Social Media
Social Media will also play a key role in this process, where we’ll see people finding goods such as clothing and paying for them without leaving the app. Live commerce will continue to grow in popularity and drive further demand for payments within the platforms. One example of this is the retailer Zara, achieving 800,000 viewers in the UK, Europe and US (Payment Trends Report, 2024).
AI-driven payment fraud
Fraud has been part of society long before technology existed, however AI has increased fraudsters abilities and alarming levels.
Professor Monica Whitty of Monash University, who leads major projects on cyberscams, insider threats and online deception, shared her insights on how AI will make scams and fraud more believable “AI will improve, not just to be more authentic but more persuasive and more believable as well”.
Monica spoke recently at the CRC-P event ‘Securing the future: Fraud prevention, privacy, and innovation in payments’ where she discussed her research into the psychology of cybersecurity and scams, advising that psychology and technology experts need to work together to “understand the human and how that technology works.”
Fintechs will play a key role in developing solutions with psychology experts, particularly small/medium fintechs with greater agility and problem solving skills than larger fintechs and banks.
Increased sharing of intelligence between banking institutions, law enforcement and government
Fraud and scams are evolving so quickly that we’re chasing after fraudsters from a distance. Collaboration and sharing knowledge is crucial for bridging this gap.
Kevin Joseph, Manager of Financial Crime Analytics at Bank Australia, knows this only too well. He dedicates his time to protecting his customers from fraudulent activity, often communicating with other banking institutions, government and other external sources.
Kevin discussed how he has seen steps made to “Share intelligence as quickly as possible, what I mean by that specifically is scam intelligence where intelligence between banking institutions, law enforcement agencies, government … making our communities safer and protecting customers money.”
Removing the silos and creating clear channels of communication and knowledge sharing between intelligence sources will help us become more resistant to these attacks.
The Fintel Alliance, a “public-private partnership led by AUSTRAC with representatives from government, law enforcement and industry…” (AUSTRAC, 2024), has made a great start in the sharing of intelligence, we look forward to seeing this develop in 2025.
Fintechs will make ground on the big four banks
A survey of Australian businesses found that 91% felt that their current business bank wasn’t meeting their needs (Inside Retail, 2023). The Australian fintech industry is expected to continue growing and chipping away at the big four banks as business customers demand more seamless and flexible payment systems.
In 2024, Australia’s fintech sector is projected to grow from a transaction value of USD 4.11 billion to 6.72 billion by 2029, at an anticipated compound annual growth rate (CAGR) of 10.32% (Mordor Intelligence, 2023).
Fintechs offer a greater choice, seamless integration with business systems, some offer a personalised approach and customisable solutions that can scale as a business grows.
The competition is healthy, ensuring consumers can receive greater choice and have specific needs met, with competition also ensuring prices remain fair.
Summary
Payments in Australia are undergoing a series of changes, driven by consumers, government regulation, technology and fraud. Fintechs are in a position to offer guidance and flexible solutions that meet the needs of governments, businesses and their customers.
Novatti helps businesses navigate the complexities of payments. We work to understand your goals and unique challenges, working with you to help your business grow.
If you would like to arrange a friendly chat and discuss how your business can leverage these fintech trends and grow in 2025, please complete the form below.
Sources
Special thanks to the following for sharing their insights:
- Rehan D’Almeida, CEO of FinTech Australia
- Professor Monica Whitty of Monash University
- Kevin Joseph, Manager of Financial Crime Analytics at Bank Australia
- Tony McGrath, Project Executive at Novatti
Payment trends report. (2024). 2025 Commerce and Payment Trends Report, Staying out front: How payments are driving differentiation . Accessed on 9 December 2024. https://www.globalpayments.com/commerce-payment-trends
Prime Minister of Australia. (2024). ‘Reducing card surcharges for Australian businesses’, Accessed on 9 December 2024. https://www.pm.gov.au/media/reducing-card-surcharges-australians-and-small-businesses#:~:text=We%20are%20prepared%20to%20ban,surcharging%20system%20is%20incredibly%20complex
Pfisterer, B. (2024). “Payment problems: Blanket surcharging bans are not the answer.” The Australian. Retrieved from: https://www.theaustralian.com.au/business/financial-services/payment-problems-blanket-surcharging-bans-are-not-the-answer/news-story/558934067c237fc8ae81a9a14f63738f
Australian Government, The Treasury. (2023). Reforms to the Payment Systems (Regulation) Act 1998 – Exposure draft legislation, Accessed on 10 December 2024. https://treasury.gov.au/consultations/c2023-452114
McKinsey & Company.(2021). The Internet of Things: Catching up to an accelerating opportunity. Retrieved 10 Dec 2024. https://www.mckinsey.com/~/media/mckinsey/business%20functions/mckinsey%20digital/our%20insights/iot%20value%20set%20to%20accelerate%20through%202030%20where%20and%20how%20to%20capture%20it/the-internet-of-things-catching-up-to-an-accelerating-opportunity-final.pdf
FinTech Australia. (2024). What is Fintech? Accessed on 9 December 2024. https://www.fintechaustralia.org.au/what-is-fintech
Mordor Intelligence. (2023). Fintech in Australia Market Size & Share Analysis – Growth Trends & Forecasts (2024 – 2029). Accessed on 9 December 2024. https://www.mordorintelligence.com/industry-reports/australia-fintech-market
FinTech Australia. (2024). Australia: home to a booming fintech industry. Accessed on 9 December 2024. https://www.fintechaustralia.org.au/newsroom/australia-home-to-a-booming-fintech-industry#:~:text=%E2%80%9CThe%20growing%20fintech%20sector%20is,is%20clear%20to%20see%20why%20%E2%80%93
Inside Retail. (2023), Zellar takes on the big four with new financial services offering. Accessed on 17 December 2024. https://insideretail.com.au/business/zeller-takes-on-the-big-four-with-new-financial-services-offering-202302
