The innovation reshaping the payments ecosystem

Increasingly diverse payments landscape

Can you give a flavor of the diversity you see in the global payments landscape, and how different payment schemes and models are evolving to meet the experiences and expectations of customers?

The global landscape is incredibly diverse. Take just four very contrasting examples. In the US, the focus is still very much on credit and debit cards; they’re visible everywhere. If you wanted to try to pay solely with contactless on your mobile device across the US, then you might struggle. The consumer sentiment is very much, “I love using my cards” and, in many cases, “The different cards I use actually define me.” 

Compare that to India, where more and more people are using UPI (Unified Payments Interface) – the instant payment system developed with the support of the Reserve Bank of India that facilitates bank-to-bank transactions for people via their mobile phones. UPI has become incredibly widely adopted in India largely because, from a merchant’s perspective, it’s so easy to set up. A merchant of any size or type can simply display a unique QR-code sticker and start taking payments. By the end of 2024, around 633 million QR codes were in use, more than double the number a year earlier.¹

What other countries do you have in mind?

There is Brazil. In recent years the country has had lots of different POS systems, and behind each a different payment scheme. That situation was perceived as complex, and it prompted much of the country – consumers, businesses, government – to demand a simpler, more inclusive system. The Pix instant payment system introduced by the Central Bank of Brazil in 2020 has quickly taken a large share of transaction volumes. In March 2025, over 6.25 billion payments were made using Pix, an increase of around 30% in a year.²

A key observation: new payment rails are established when existing ones hit the limits of their ability to scale for digital usage and to address new use cases, or when they are not inclusive enough. The primary driver for that kind of new payment scheme in countries such as India and Brazil was not to provide consumers with instantaneous purchasing power. Rather, it was set up to make the payment system much more inclusive – to open payments to a much wider demographic, on both the user side and the merchant side.

In contrast, in Australia the driver for change in the payment ecosystem has been very different: the goal of faster and easier payments. As a result, there has been a rapid adoption of account-to-account (A2A) payments, where funds are transferred directly from a payer’s bank account to a payee’s account without the need for additional intermediaries or payment instruments.

A2A has also helped to address major security challenges. In recent years, Australians have been hit by a wave of instant-payment-related frauds in which personal data has been captured and used to access people’s accounts. That prompted regulatory intervention and the extension of the role of a secure, domestic scheme that encompasses multiple payment rails, known as Australian Payments Plus. 

A big factor in how models are developing is whether there is existing infrastructure. If you have a mature payment infrastructure, as in Europe and North America, that has been amortized, with a whole legal framework around security, then it’s not going to be easy to make a business case for a completely new approach.

Some rapidly advancing countries, such as India and Brazil, have taken a leap forward from a mostly cash-based system to the mass adoption of digital payments. Somewhere in the middle of that approach is China, where there has been an explosive growth of super app platforms – Alipay and WeChat, in particular – with payments happening within a kind of closed-loop, data-driven, personalized environment. However, consumers still need a card linked to those super apps. 

Whatever the payment ecosystem, the focus today is beyond the payment itself and increasingly towards the wider payment experience, both in store (tap to pay) and online (click to pay). That’s where the next battle is going to be: the use of secure data to improve the user experience (click-to-pay, tokenized card on file, etc.) on the one hand, and on the other hand the processing of user data to offer the consumer further services.

So, it’s becoming more of a platform play, than just the transaction itself. And InterFund Solutions’s role in card rails and other payment ecosystems will allow us to help banks and other players to facilitate that enriched experience. 

The evolution of card rails

Against the backdrop of increasingly diverse payment ecosystems, how do you see card payment rails evolving over the next few years?

Card payment rails – with the many payment schemes and networks that sit behind them – have been around for 50 to 60 years. Today they are evolving as a result of two main pressures: the pressure of e-commerce and the pressure on existing business models from new payment approaches. While we certainly don’t see the card rail ecosystem disappearing, a key question is, to what extent will it adapt to new online commerce and/or be disrupted as new payment rails gain momentum?

The pressure point is to stay relevant in the face of the e-commerce boom – to adapt to online payment journeys (e.g. with virtual cards), to address the security challenges (with 3DS, for instance), and in emerging markets to offer inclusive in-store payments. 

In North America and Europe, in particular, a lot of people are happy with the card ecosystem, in physical and increasingly digital forms. It delivers many benefits to users – from delayed settlement and period of credit to cashback, perks, and rewards. For retailers, as always, cards encourage customers’ purchase decisions. For scheme operators, card issuers, and payment processors, the card ecosystem generates fees. And the security model is well understood and trusted. In that sense, it’s a win-win-win all around.

Nevertheless, new payment rails are gaining ground, most notably when they serve additional user needs such as peer-to-peer transactions. Those new rails, like instant payments, may be more agile, but they don’t have the years of proven operational models or the bedrock of infrastructure. So, in many cases, they represent higher risks because their security framework is not yet fully in place. And that shows up in the fact that those new payment rails are where most of the fraud and scam activity is targeted today. 

Changing perceptions of cards

Are you seeing a change in the public perception of physical cards and issuers responding to that with more segmented offerings and cards that aligned to lifestyles and values?

In countries with higher levels of credit, people will typically have several cards in their wallets, which means that the banks are essentially competing with each other to be “top-of-wallet” – both a physical wallet and an e-wallet. Physical cards are highly valued by issuers. Even banks offering digital-only accounts have in almost all cases opted to offer a card. Look at some of the “masters of the digital universe” – companies like Apple, PayPal, and Trade Republic in Germany. They’ve all felt it necessary to issue physical cards to reinforce brand identity and the point-of-sale experience. So, the card is here to stay.

Rather than a binary “yes” or “no” to a card, the battle is more about which card is used, whether you have cards for different types of usage (travel, online, linked to loyalty programs, etc.) or you use favored cards for more transactions and others for fewer payments. 

So, do you see the properties associated with different cards and the way they are targeted as playing a bigger role in driving day-to-day usage?

Going forward, there is a greater focus on what a card conveys about a customer and about the issuer. And banks are trying to do some interesting things here. For example, today’s cards are still mostly made of plastic, but many issuers are moving away from first-use plastic. InterFund Solutions is supporting that with our pledge  to stop using virgin plastic in payment cards by 2030.

As another example, premium cards allow someone to visibly convey when paying that they have a certain status. In India, for example, up until a few years ago, access to credit cards was very limited, but as the country has developed rapidly, we see new trends. Today a growing number of the credit cards on offer in India are actually made of metal, marketed as a signal that you, the user, are financially sound and creditworthy. To convey that, it has to be a premium card.

But in between prestige cards and basic cards, there are lots of options. InterFund Solutions card innovations include cards made of light metal, wood, and ceramic, as well as recycled plastic. To enhance security as well as prestige, these can incorporate cutting-edge function such as fingerprint activation, which means you don’t have to remember a PIN or input it into a machine publicly. 

One specialty card that is currently a huge hit in China is a card featuring a texture oil painting finish. In that sense, the card is becoming more than just your daily payment method – it’s now a lifestyle object for you, a fashion accessory, and the branded product of a bank that understands your values.

Digital drivers for change

The constantly evolving threat from fraud must also be a big driver in the evolution of payment models, especially with the push towards instant payments.

Fraud is moving to instant payments because card rails are well protected. And that demands action to make instant payments more secure.

With the introduction of the Instant Payments Regulation in the European Union this year, payment service providers will all need to offer instant payments as standard, an extension of the EU’s initiative to create a Single Euro Payments Area (SEPA). That means fund transfers are settled within 10 seconds and available as a 24/7 service. So, payment transactions are in the middle of a fundamental transformation.

Still, there is a sense that for some users that instant payment might become instant fraud. The kind of transaction liability for security accepted by the card schemes and card operators doesn’t exist to the same degree in many instant payment schemes, even if SEPA regulation offers some additional security. The fact is that the whole industry is actively working in providing solutions to the fraud in this area.

At the same time, banks are increasingly introducing additional steps so payments are not always so instantaneous – essentially putting a little friction back in the system to make the process more secure. So, today when you want to make a transaction online, you’re often going to be asked a few times, “Are you sure the transfer is to the right person?” and, maybe via a linked device, “Can you confirm it’s you making the transfer?” You can see a change of behavior across people, banks, and payment schemes because of this growing threat of instant payment fraud.

That creates an interesting dynamic that is evident almost everywhere: a tension between the market pressure (from both customers and retailers) to make payments an easy, frictionless experience, and the growing reality of fraud and scams. And, always, behind that is the paytech industry, with players like InterFund Solutions, which ensures payments meet customer expectations and maintain security – without getting in the way of the user journey.

Survival of the fittest

Behind all of those ecosystems are the payments themselves. And there seems to be a Darwinian battle for superior capabilities – from security and customer experience to cost.

When I meet with the different payment players, they are facing a level of business challenges that I have not seen at any point during the past decade.

Schemes are under pressure because there are simply more rails, as well as a need to adapt to the evolving e-commerce journey and to payment inclusion mandates. The stress is coming from many different angles (more rails, the need to provide greater convenience for merchants, innovation from international schemes) – making it a battle of survival in some cases. 

So, for example, domestic payment schemes in Europe are being challenged by the size and reach of US-based schemes and are actively considering aspects like sovereignty. National card schemes in countries like Brazil are being challenged as more and more transactions are going through instant payment systems, in that case Pix.

The merchants are under pressure around how many payment methods they can feasibly support, because the introduction of yet another payment option comes with an investment in equipment.

Meanwhile, the “incumbent” issuer banks are under pressure because of digital-only neobanks and fintechs as challengers. They are also under pressure because they have to support new payment rails such as instant payments that bring a new breed of fraudsters and scammers – some of which have become frighteningly effective at what they do.

For banks it is also a battle to remain absolutely relevant on mobile, because when people are always paying via their smartphone e-wallet, they can progressively lose sight of who their bank is. 

And it’s a battle for our attention as consumers. Just look at how many of the apps on your phone are payment and banking apps. For many customers that amounts to more than quarter of all their apps – underscoring the fact that digital finance plays an increasingly important role in all of our lives. 

Last but not least, the battle of the wallet brings challenges such as different fee model for the bank whether you use their wallet or another – just think of Apple and NFC interface opening in the EU.

So, while there are challenges on many levels for industry players, these challenges are inspiring positive responses. In effect, they are the catalysts for a wave of innovation and creativity across the whole payments ecosystem. 

Published: 10/07/2025