AI in 2025: Transforming Payments for Merchants and Consumers

Artificial intelligence (AI) is set to revolutionize the payments industry in 2025, promising faster transactions and expanded payment options. While AI is already streamlining behind-the-scenes processes, its impact will soon become more visible to consumers and businesses alike.

Enhancing the Consumer Experience

AI is poised to give customers more flexibility at checkout. Tools like Buy Now, Pay Later (BNPL) are becoming more accessible through AI-driven analysis of transaction histories, enabling instant risk assessments. This aligns with Gen Z’s demand for quick, diverse payment methods, says Davi Strazza, President of Adyen North America.

AI will also personalize shopping experiences. By analyzing behavioral data, fintech companies can provide tailored recommendations, making it seem like they’re anticipating customer needs. As Michael Imerman of UC Irvine explains, AI leverages digital footprints to deliver content that aligns with user preferences.

Unexpected card declines will decrease as AI evaluates alternative data points like regular bill payments or remittances, providing more accurate risk profiles, notes Bill Maurer of UC Irvine’s Institute for Money, Technology and Financial Inclusion.

Optimizing Merchant Operations

For merchants, AI offers tools to streamline processes and improve payment performance. Payment platforms are using AI to automate tasks like fraud detection, invoice processing, and risk analysis, reducing errors and speeding up operations.

By analyzing transaction patterns and customer data, AI enables merchants to make faster, data-driven decisions that enhance conversion rates and reduce payment disruptions. These advancements allow businesses to offer seamless payment experiences while minimizing operational inefficiencies.

As computing power grows, AI will become a cornerstone of the payments ecosystem, delivering faster, smarter, and more personalized solutions for both consumers and businesses. The future of payments is here—powered by AI.