A roundup of payment trends and predictions for 2025 for small businesses

From the rise of AI-powered security to the dominance of contactless transactions, staying informed on the latest trends may not just be helpful — it may be essential for small businesses aiming to meet today’s consumer expectations and stay one step ahead of the competition.

But don’t worry; it’s our mission to keep small businesses flourishing, so we’ve taken one thing off your plate. 

Using original data from takepayments’ card machines across the UK and insights from Global Payments’ 2025 Commerce and Payment Trends Report, we’ve rounded up the key trends from 2024 to take into the new year. 

We’ve also given our predictions on the payment innovations we think may shape 2025, making it easy for you to keep your business competitive and your customers happy.

A roundup of the state of payments 

1. Contactless transactions continue to top the charts

First up, contactless payments are still leading the way. In fact, they’ve seen a 19% increase from last year (when we analysed our transaction data from merchants comparing the number of contactless transactions from August 2023-24). And as people are tapping the plastic more and more often, the amount they’re spending via contactless has also increased by 28% year on year.

In March 2024, the number of contactless cards in the UK surpassed 150 million, accounting for 93% of all cards in circulation in the country.

2. Digital wallets surpass cash in popularity

In 2023, we found that mobile wallets like Apple Pay have claimed the number two spot right after contactless, overtaking cash for in-store purchases – and it’s not just a fleeting trend.

New data shows that 1 in 5 Brits regularly make in-person transactions using mobile wallets, and almost half of UK consumers leave the house with just their mobile as a payment method.

3. Cash is still on the decline

With nearly 1 in 3 people admitting they never carry cash and over half of customers saying they’d avoid a business that doesn’t accept card payments, cash is taking a backseat. 

Recent figures show cash usage has dropped to an all-time low of just 12% of all payments in the UK, down from over half of all transactions just 10 years ago. This has no doubt caused a knock-on effect in falling numbers of physical bank locations, with 40% of bank and building society branches closing between 2012 and 2022.

While it’s easy to assume that a shift towards a cashless society is drawing near, cash transactions account for an estimated 1.5 million people still spending with paper. As trends like ‘cash stuffing’ — where consumers budget by dividing and saving cash in physical envelopes — continue to emerge and draw attention, it’s still a worthwhile consideration for small businesses reviewing their payment options. 

4. Chip and PIN falls out of favour

While contactless and mobile wallets lead the way, chip and PIN seems to be on the decline, with only 1 in 10 people saying it’s their preferred method of payment in 2023. We also found that chip and PIN transactions only grew by 4% in 2024, compared with contactless’s 19% growth in 2023-24.

Despite this downward trend, chip and PIN won’t be disappearing completely anytime soon, as it remains a crucial part of enforcing card payment safety in the UK. Customers are still required to enter their PIN number for physical card transactions over £100 or after a certain number of contactless transactions. 

5. Women prefer contactless payments

Interestingly, gender also plays a role in payment preferences and it’s something that’s worth considering when we review payment trends for now and the future.

In the past, we found that men are 22% less likely than women to choose contactless. With contactless leading the way as an efficient payment method, promoting this as a transaction option could be a great way to reach and engage a female audience.

6. Contactless leads to higher spending

Our recent survey revealed that over half of Brits say that using contactless payments makes them spend more and find it harder to stick to a budget. 

The convenience of tap-and-go transactions is undeniable, however, two out of three customers state that the speed of a payment is just as important to them as the price of what they’re paying for. 

Payment trends to expect in 2025

1. Contactless payments could carry on leading the way as convenience options

Contactless payments have solidified their place as the top payment choice for consumers, largely due to their convenience for everyday transactions. We found that the number of contactless payments in the UK has grown nearly 20% in the last year, and this trend shows no sign of slowing down. 

Digital wallets are also rising in popularity alongside contactless, and are projected to account for 29% of point-of-sale (POS) transaction value by 2027. However, digital wallets are already evolving; business owners should be on the lookout for emerging ‘super wallets’. Super wallets use AI speech recognition so users can transfer money, reveal account balances, and make online purchases by voice command. They can also provide detailed spending insights and provide information on credit scores.

For many consumers, contactless payments are no longer just a preference — they’re an expectation. This shift is particularly noticeable among younger generations, who have largely adopted mobile payments as part of their routine; our research showed that those aged 18-24 preferred to pay via mobile wallet, compared to only 5% of those over 55. 

What this means for businesses:

To stay competitive in 2025 and beyond, small businesses need toshould prioritise flexible POS systems that can accept both contactless and mobile payments, ensuring a smooth, convenient payment experience for their customers.

While flexible and varied payment methods are essential for businesses to appeal to the modern customer, it’s vital they also prioritise security without compromising the user experience. Customers of today expect a quick, seamless transaction, but they also want the assurance that their information – and money – is protected. 

Strong authentication measures, like 3D Secure, tokenisation, or biometric verification, can enhance security in a way that’s almost unnoticeable to the customer and limits friction in their checkout process. As digital payments become the norm, customers need to feel both secure and valued.

2. Cashless transactions could continue to rise, pushing cash further out of popularity

The shift away from cash is accelerating as consumers increasingly favour digital payments. Today’s consumers, especially younger demographics, expect businesses to offer cashless options, with nearly 1 in 3 people stating they never carry cash.

As cashless payments continue to dominate, small businesses that still rely on cash-only operations may risk losing customers. Meanwhile, industries are rapidly adapting; for example, only four out of the ten host stadiums of the Euros 2024 accepted cash at kiosks, showing the shift toward cashless experiences even at high-traffic events.

What this means for businesses:

Cashless payments offer an easy and fast option that today’s consumers value a lot. However, it’s important to provide options and give customers a choice. By integrating flexible POS systems that accommodate cash and cashless payments, small businesses can cater to a wider range of customer preferences and make sure that no one is left without a means to pay.

3. AI adoption could be huge for businesses who want to scale up

Artificial intelligence (AI) is transforming organisations across all sectors, from healthcare to technology. It offers opportunities to speed up processes to cut down on time and boost efficiencies.

For the payments industry, AI brings both enhanced security and improved customer experience. The adoption of AI in finance has surged, with 70% of banks with centralised generative AI operating models progressing to putting AI use cases into production. And AI is no longer a luxury for large corporations; it’s becoming more accessible to small businesses looking to streamline their operations, cut costs, and safeguard their systems. 

Global Payments’ report revealed that 94% of SMBs were testing, deploying, or currently using AI to enhance biometric technology. 

AI can help smaller businesses meet growing expectations for fast, seamless payments while protecting against increasingly sophisticated fraud. For example, AI-powered tools can automatically detect fraudulent activity in real-time, analyse customer behaviour to identify unusual activity patterns, and even lead to smoother checkout experiences, making them invaluable assets for scaling.

Artificial intelligence is also advancing to integrate with payment methods like point-of-sale (POS) systems, becoming an extension of a business’s customer support. AI-enabled POS systems could provide food and drink recommendations for hospitality businesses based on changing factors like peak periods. Or it could help to analyse stock levels and staff rotas to boost efficiencies and give small business owners one less thing to worry about.

What this means for businesses:

AI offers transformative potential for businesses, particularly for security and efficiency, and it’s becoming more accessible and affordable, even for small businesses.

Implementing AI tools, such as fraud detection algorithms and customer support chatbots, reduces operational costs and allows teams to focus on more strategic tasks. As digital payments continue to grow, AI-driven solutions provide the ideal balance of security and convenience, helping businesses stay competitive and their customers feel valued.

4. Fraud could become more rampant, driving the need for enhanced prevention measures

With the increase in digital payments comes a rise in fraud attempts, making security a growing priority for businesses. In the first half of 2024 alone, the UK recorded over 1.5 million cases of unauthorised transactions across payment cards, remote banking, and cheques, totalling £358 million. 

As online transactions become the norm, fraud tactics are evolving, prompting businesses to adopt advanced security measures like multi-factor authentication (MFA) and AI-powered fraud detection systems to keep their operations safe. Visa and Mastercard have both invested heavily in generative AI technology that can analyse transaction data at scale and flag new, unusual fraud patterns on an individual account level. 

What this means for businesses:

For small businesses, investing in these solutions is about protecting assets and maintaining a reputation of reliability in a competitive market.

Fraud tactics are constantly evolving, and businesses should stay one step ahead to safeguard their revenue and customer trust. Integrating multi-layered security options, keeping technology up to date, and following the latest card security standards laid out in the Payment Card Industry Data Security Standard (PCI DSS) means businesses can protect themselves while giving customers peace of mind. The key is finding a balance — security that’s effective without being intrusive.

5. Consumer trust in biometric payments may increase

Biometric payments are quickly becoming a game-changer in the payment landscape, with consumers increasingly gravitating towards fingerprint and facial recognition as a secure, convenient alternative to traditional payment methods like chip and PIN. 

The global biometric card market is estimated to experience a compounded annual growth rate of 117% from 2024 to 2029. The appeal lies in the blend of speed and security: 60% of consumers report feeling safer using biometric verification compared to using a PIN. 

This added layer of security is showing promising results in minimising fraudulent activity, encouraging consumer confidence, and enhancing overall user experience. 82% of UK customers stated that they trust behavioural biometrics to prevent fraud, and 55% said that the technology enhances their opinion and trust in a business. 

Global Payments’ report found that 31% of businesses were investing in biometrics to boost security, and of those currently adopting it, 94% have reported a very high or high positive impact.

What this means for businesses:

As public trust in biometric payments continues to increase, small businesses may benefit from adopting biometric-enabled POS systems to attract tech-savvy consumers and improve transaction security.

Biometrics offer a powerful blend of security and convenience, making them ideal for customer expectations of faster, easier, and more secure payments. For small businesses, adopting biometric technology can enhance the payment experience while also helping them to meet Strong Customer Authentication (SCA) measures — which is a requirement in the Payment Services Directive (PSD2) for all customer-initiated online card or contactless offline payments in the United Kingdom.

6. Buy Now, Pay Later popularity may continue to grow

Research from Finder has revealed that half of UK adults have used Buy Now, Pay Later (BNPL) services in 2024, up from 36% in 2023. Looking ahead, BNPL transaction value is projected to grow globally by 106% by 2028. 

The convenience of BNPL has made it an attractive choice for consumers, with inflation and the cost of living crisis further fueling shoppers’ decision to defer payments. Our recent study found that 1 in 5 Brits have no savings, which makes Buy Now, Pay Later services an extremely appealing option for those who don’t have immediate access to funds or want more flexibility over their spending.

However, the sector is facing increasing attention and calls for regulatory oversight, and we’ve even seen large organisations like Apple and NatWest moving away from the space in 2024.

While BNPL enables shoppers to manage their budgets by breaking payments into smaller instalments, some consumers may struggle with managing multiple BNPL accounts and repaying money on time. The government announced plans to regulate the sector in 2021 but has yet to implement any new legislation that encourages responsible lending practices, and there’s a chance that further delays in regulations could only accelerate BNPL growth. 

What this means for businesses:

BNPL gives customers the flexibility they need, which can make all the difference in today’s economic climate. For businesses, BNPL can drive higher sales and appeal to a wider audience of budget-conscious shoppers.

However, it’s essential to partner with providers that offer responsible lending solutions and prioritise transparency. As BNPL continues to evolve, businesses must stay proactive and offer it as a responsible, customer-friendly payment choice. As we wait for new regulations to be brought in to protect consumers from the dangers of unrestricted lending, keeping an ear out for any changes to existing or new regulations is a must.

7. Business adaption of embedded payments grows 

Embedded payments allow customers to complete transactions without leaving a platform’s website, mobile app, or social media page. They essentially cut out the need for redirects or additional steps in the check-out process that could encourage users to abandon their basket.

Global Payments’ survey showed that 76% of enterprise-sized businesses have been using embedded payments for at least five years now. This is expected to reflect with smaller organisations – 82% of SMBs and 63% of midmarket companies – as they’re more likely to increase their investments in embedded payment technology in 2025.

We’ve already seen common use cases for embedded payments that simplify everyday tasks, like pre-ordering meals or drinks, paying for taxis, or booking services directly within an app. By streamlining the transaction process, embedded payments save customers time and make their lives easier — all while encouraging repeat purchases.

Take, for example, the Starbucks loyalty app, which integrates payments directly into its platform. This allows customers to pre-order and pay for their drinks before collecting them from a store. Similarly, Mercedes Pay incorporates built-in biometric payments, letting customers buy upgrades, services, or products from within their vehicle.

The convenience offered by embedded payments is especially valuable in industries where speed and simplicity are key. Retailers make up a large portion of long-term users of embedded payments, but the automotive, restaurant, and hospitality sectors have also expressed significant interest, according to Global Payments’ findings. 

What this means for businesses:

While embedded payments aren’t yet standard across all industries, businesses can take inspiration from these advancements to make their own payment processes more efficient. Whether it’s offering simplified checkout flows or integrating multiple payment methods into one platform, the goal is to remove barriers for the customer.

While not every business may have the resources to fully integrate payments into their platforms, taking steps to simplify the payment journey — whether through mobile wallets or flexible POS systems — can still deliver that sense of ease customers now expect. Every effort to make payments feel natural and effortless helps build trust and loyalty with your customers.

In summary, here are the payment trends we think we might see more of in 2025:

• Continued growth of contactless payments over other methods
• Sustained rise of cashless transactions over traditional cash
• Small businesses turning to AI to help speed up processes and aid with security
• Increases in payment fraud leading to enhanced prevention measures
• More businesses adopting biometric transactions as a secure payment method
• Buy Now, Pay Later usage increasing as regulations are yet to be brought in
• An increase in small businesses exploring embedded payment options.

Get up to speed with takepayments

Whether you’re looking to add contactless card machine options, integrate online payments, or get set up with a full POS system, we’re here to make sure your business is ready for the latest payment trends.

To learn more about how we can help you stay ahead, get in touch with our team on 0808 274 2017.

Jodie Wilkinson

Head of Strategic Partnerships