In 2023, Phase 5 and NYPAY co-produced a survey of leading financial, payments, fintech, and consulting professionals in the U.S. to get their views on the future of Artificial Intelligence (AI) in the payments landscape in the coming years. 

Given the pace of AI developments over the past year, we conducted a second edition of the survey in December 2024 to explore how things changed in 2024, and what 2025 is expected to bring. This post discusses the findings from both years, identifying key opportunities and challenges for the payments sector.

Key Insights from the Survey

AI Adoption Barriers

Key barriers to adopting AI for payment applications include integration complexity and regulatory & compliance issues. Research shows that 77% of companies view AI compliance as a top priority, particularly as regulators have expanded oversight of AI in financial services to address issues like bias, data privacy, and automated decision-making. This has implications for how businesses collect, process, and use data, making compliance a growing challenge. 

Data privacy concerns and lack of AI talent remain important as well but are less prominent compared to last year.

Notably, cultural challenges saw a sharp rise in significance, with 37% citing resistance to change within the organization as a barrier, compared to only 13% last year. This sentiment is echoed in the industry at large . In a recent survey of financial executives, 3 in 5 agreed that overcoming cultural change is more important than the technical challenges of AI adoption. 

Source: NYPAY, Phase 5 Dec 2024 Study

AI Use Cases 

Payment fraud detection and mitigation clearly emerged as the biggest opportunity area for AI applications over the next two years. Over half of payment experts surveyed also see strong potential in using AI for customer onboarding, customer service, and automation of business processes such as marketing, billing, and payment processing.

Source: NYPAY, Phase 5 Dec 2024 Study

Key Takeaways 

• AI’s impact is imminent, but businesses aren’t ready to capitalize on it yet. The complexity of integrating AI into existing payment infrastructure is underpinned by compliance challenges, such as data privacy and evolving regulations, and organizational & cultural challenges, such as resource limitations and resistance to change. Addressing these concerns and getting buy-in from business stakeholders will be instrumental in realizing AI’s potential to transform the payments space.  
• AI has the potential to improve all aspects of the customer journey. Payment fraud protection is seen as the biggest area of opportunity for using AI, and one that is increasingly important as fraudsters become more advanced and convincing.  In fact, companies like Mastercard are already using generative AI to scan data points and predict whether transactions are likely to be genuine or not, boosting fraud protection rates by 20% on average.
  Beyond cybersecurity as well, payment experts see AI reshaping the entire customer journey – streamlining onboarding, enhancing service interactions, and automating core business processes like marketing, billing, and payment processing.  

As the payments industry shifts toward a more AI-enabled future, the question is no longer if it will transform payments, but how quickly businesses can adapt to stay ahead. Those who proactively invest in system modernization and overcoming employee resistance will be better positioned to offer secure, efficient, and seamless experiences.

NYPAY is a not-for-profit membership association of approximately 4,000 senior executives in banking, payments and fintech, founded in 2006.  NYPAY seeks input from its members to better develop our monthly meetup topics of interest, and this is the reason for this annual NYPAY Member Topics survey.  This article was created based on responses to this survey.  If you have any questions on NYPAY topics, events or sponsorship, please do not hesitate to contact NYPAY. 

You can also read the findings on the NYPAY website.

For more information about this or other financial services studies, or to discuss how Phase 5 can support your organization’s journey toward customer-centricity, contact Phase 5 here.