Mergers Plus Tech Redraw Battle Lines in Payments Sector, Says FIS

Industry mergers, technology and economic challenges are driving change in the payments space, EVP Group President, FIS Automated Finance Seamus Smith writes in a new PYMNTS eBook, “Halftime 2025: Charting the Future of Payments.”

The major mergers and acquisitions in the first half of 2025, including Global Payments acquiring Worldpay and FIS acquiring Global Payments’ Issuer Solutions business, have significantly reshaped the industry. These deals have led to a more streamlined focus for Global Payments as a pure-play merchant solutions provider, enhancing its eCommerce and integrated payment capabilities. For FIS, the acquisition of Issuer Solutions strengthens our position as a leading FinTech with expanded credit processing capabilities. Overall, these transactions are expected to drive growth, improve financial profiles and create synergies that will positively impact business strategies and industry outlooks.

Internal Developments

Access to capital is quite expensive these days. Gone are the times where cash was virtually free. We understand that corporations are exploring how to generate more cash flow internally versus taking on loans with high interest rates. We addressed this trend by adding FIS Supply Chain Finance through our recent acquisition of Demica, one of the world’s largest solution providers with more than 250 funders and over $40 billion in assets under administration. This solution addresses challenges faced by corporations that impact their cash flow by offering a robust response to economic disruptions and volatility.

Another development is our expansion of vCard as a capital management tool for mid to large enterprises. The benefits of vCard as a digital payment option are not unknown; however, we have identified that accessibility on both ends of the transaction is not universal. Suppliers struggle with automating the processing and application of vCards, making it easier to stay with the “tried and true” check payments. Payers often are not sure how to get started, how to structure or how to maintain a secure, efficient vCard program. We are positioning ourselves to not only offer vCard, but to fully support simplifying the user experience.

Using AI and Data Analytics to Address Challenges

The way a company receives invoices, makes payments and communicates can often be predictable when data is accurately analyzed and reported. However, the challenge lies in doing this at scale, given the large quantity and diverse nature of the supporting data. By providing access to AI-powered tools, companies can optimize data usage to uncover patterns and identify risks, freeing up resources for mitigation rather than identification. These AI tools leverage internal historical experiences with customers to predict future delinquency, while also integrating external credit bureau data to capture risks that might be masked by good payment behavior with individual entities.

Leveraging large language models to improve cash application match rates reduces manual effort and simplifies the processes which cause friction in the customer experience.

Trends and Technologies

In the second half of 2025, several trends and technologies are poised to disrupt the payments industry:

Stablecoins: the regulatory landscape around stablecoins is moving at pace with several impacts on stablecoin users. The GENIUS act aims to create a safer and more stable environment for users by including enhanced security and transparency with stricter reserve requirements, consumer protection preventing misleading marketing practices, improved stability with strict liquidity rules, compliance with anti-money laundering (AML) rules and a potential for greater acceptance and adoption into mainstream financial systems.

AI-powered fraud prevention: With the rise of cybercrime, AI-driven models are becoming essential for detecting and preventing fraud in real time, significantly enhancing security.

Real-time payments: The demand for instant transactions continues to grow, pushing financial institutions to adopt real-time payment systems that offer immediate fund transfers.

Embedded finance: Integrating financial services into non-financial platforms (like eCommerce sites) is becoming more prevalent, making transactions more seamless and convenient.

Biometric authentication: Technologies such as fingerprint and facial recognition are being increasingly used to enhance security and streamline the payment process.

Buy now, pay later (BNPL): This payment option is expanding into new sectors, providing consumers with more flexible payment solutions.

These innovations are expected to drive significant changes, making payments faster, more secure and more integrated into everyday activities.

Economic Factors

Broader economic factors are significantly influencing priorities and investments in the payments space this year:

Regulatory changes: New regulations are prompting businesses to invest in compliance and adapt their operations to meet evolving standards. This includes enhancing security measures and ensuring transparency in transactions.

Inflation: Rising inflation is affecting consumer spending patterns and operational costs. Companies are prioritizing cost management and exploring innovative solutions to maintain profitability.

Global economic uncertainty: The unpredictable global economic environment is driving a cautious approach to investments. Businesses are focusing on risk management and diversifying their portfolios to mitigate potential disruptions.

These factors are shaping strategic decisions, emphasizing resilience and adaptability in the payments industry.