The theme song for 2025: Payments
In the world of finance, 2025 is shaping up to be a year of monumental change. Traditional payment rails—the backbone of how money moves through economies—are poised for a significant shake-up as new technologies, regulations, and consumer preferences converge to rewrite the rules of payments. For credit unions, staying ahead of these changes is critical to remaining relevant and competitive.
Cracks in traditional payment systems
Traditional payment rails, such as ACH, SWIFT, and card networks, have long facilitated the secure and reliable movement of funds. Yet, these systems come with inherent limitations: high transaction costs, settlement delays, and a lack of transparency. These inefficiencies are becoming increasingly glaring in a world demanding real-time, borderless, and frictionless financial interactions.
For example, cross-border payments via SWIFT can take days to settle and often involve multiple intermediaries, driving up costs and complexity. Meanwhile, ACH systems, while efficient for batch processing, fall short of the real-time capabilities now expected in consumer-to-business and peer-to-peer transactions.
Forces driving the disruption
Several trends are converging to disrupt traditional payment rails:
- Blockchain and distributed ledger technology (DLT): Blockchain is no longer a buzzword; it’s a foundational technology reshaping payment infrastructure. By enabling secure, transparent, and nearly instantaneous transactions without intermediaries, blockchain-based systems are challenging the dominance of SWIFT in cross-border payments.
- Real-time payment systems: Instant payment solutions like the FedNow and RTP networks are gaining traction. These systems promise to deliver the immediacy that consumers and businesses now demand.
- Fintech innovations: Payment startups and tech giants are creating seamless, integrated payment experiences. Innovations like embedded finance and digital wallets are shifting consumer expectations away from legacy systems.
- Regulatory shifts: Governments are pushing for greater competition and innovation in the payments ecosystem, opening the door for non-bank players to disrupt traditional incumbents.
Implications for credit unions
For credit unions, the disruption of traditional payment rails presents both challenges and opportunities. On the one hand, outdated systems can hinder member satisfaction and operational efficiency. On the other, embracing new technologies can demonstrate that credit unions are innovative and focused on meeting the needs of the people.
Key strategies for credit unions in 2025:
- Adopt real-time payments: Integrate with instant payment systems like FedNow or RTP to meet member expectations for speed and convenience.
- Leverage blockchain technology: Explore partnerships with blockchain-based platforms to offer low-cost, transparent cross-border payments.
- Enhance digital offerings: Prioritize seamless integration of digital wallets and embedded payment solutions to remain competitive.
- Educate members: Provide resources to help members understand and benefit from new payment technologies.
Conclusion
The payments landscape of 2025 will be unrecognizable compared to today. Traditional payment rails are no longer sufficient to meet the demands of an increasingly digital and interconnected world. For credit unions, the time to act is now. By embracing innovation and adapting to change, credit unions can not only survive this disruption but thrive as trusted financial partners in a transformed payments ecosystem.
Becky Reed is a credit union industry veteran and thought leader with more than two decades of experience in credit unions and CUSOs. Renowned for her unique perspective as a credit union CEO, CUSO and fintech leader, her expertise are sought after by those who seek to embrace innovation.
