Despite the buzz surrounding both the promise and risks of artificial intelligence, its impact is likely to remain limited over the next few years. While companies rush to develop uses for AI, they are less enthusiastic about the costs associated with biometrics—even though the technology is much closer to delivering more immediate benefits to payment processors.
Christopher Miller, Lead Analyst of Emerging Payments at Javelin Strategy & Research, explores why these trends have such different reputations in the 2025 Emerging Payment Trends report, noting another trend that’s making waves in the world of payments: targeted advertising.
AI: Time to Calm Down
Generative AI—and AI more broadly—is here to stay. However, over the next three years, the concept of AI as a groundbreaking force will lose its relevance and impact. As the limitations of current technologies become clear, even successful implementations will become just another part of the workflow. These changes will happen even as AI’s long-term potential becomes evident.
“There is a drumbeat out there that the impact of the new flavors of artificial intelligence is going to be immediate and disruptive,” said Miller. “The message has been that jobs will be lost, businesses will be transformed, industries may be eliminated. But the rhetoric is out of step with the impact of the technologies that are being launched today in artificial intelligence.”
Some tasks are likely to undergo radical changes in the very near future, while others—such as certain types of content creation or code writing—may already have been partially altered. But many tasks remain completely untouched. In the payments industry, for example, many processes are unlikely to be impacted in the near or even mid-term future.
“My message is written to folks who are in payments industry, and it’s calm down,” said Miller. “The fact that some things that you are doing are in fact radically changing doesn’t mean that everything you do will radically change.
“Your business doesn’t particularly need an AI strategy,” he said. “It needs a business strategy that figures out how to leverage AI when it is appropriate.”
Making Room for Biometrics
Biometric authentication for payment transactions has reached a critical moment, although with much less fanfare than AI. The technology is not only proven and widely available, but it’s already in broad use in some global markets.
Two key benefits support the implementation of biometric authentication: frictionless experiences and fraud reduction. Nearly a decade of experience with fingerprint and facial recognition has demonstrated a clear advantage: an easy verification process that eliminates the need for additional forms of ID. After all, everyone always has their face, hand, or palm with them.
The rise of digital wallet payments authenticated via fingerprint or facial recognition, along with the launch of products such as Amazon One/Pay by Palm, has helped remove some of the futuristic stigma surrounding biometric authentication. These innovations have introduced consumers to a straightforward and frictionless process. There is now enough evidence to suggest that biometric technology will be well accepted by consumers.
“Consumers are not inherently weirded out by the notion of presenting a biometric credential to do something, whether it’s a fingerprint or facial ID or whatever,” said Miller. “Most consumers have some kind of mobile device. Most of those mobile devices use at least some form of biometric authentication. And the thing that they are used to doing with their mobile is easy and painless.”
While consumers are not the obstacle to biometric adoption, companies are wary of the costs and uncertainty about who will ultimately benefit. Biometrics are a strong tool for fighting fraud, and their use in card-not-present transactions has resulted in substantial fraud reduction. However, in card-present situations—where the consumer is physically in the store and taps their card—the potential for fraud reduction is much lower. This has left many retailers questioning if it’s worthwhile to take that step.
“In the EU, biometrics act as a step-up authentication for transactions,” said Miller. “It is not specifically mandated, but it is one of the legally acceptable ways to meet an authentication standard set by law that is higher than in the United States. Their companies had a compliance requirement that had to be met, and now it was a matter of figuring out the best way to meet it. In the U.S. it’s a different scenario. Whether this will be widely adopted is largely something to be determined by whether it will be required.”
Targeting the Consumer
As previously mentioned, targeted advertising has taken its leap into the world of payments. With the wealth of data collected, payment processors are uniquely positioned to target messages to their customer base.
The most lucrative use of consumer data has been through targeted advertising. That will enable companies to identify customers most likely to respond favorably to their offers. Within the payments space, this model has expanded to certain digital wallets as well as some card-based offerings.
“The types of offers that you can see will be you more closely aligned to things that you do,” said Miller. “If you stay at a hotel, you’re likely to see an offer from that hotel brand. If you have a relationship with a particular airline, you’ll get offers from them. The transaction data is clearly influencing the types of deals that you see.”
Issuers should carefully consider the benefits and drawbacks of extending their current customer relationships in this way. The digital advertising model suggests tha selling targeted access may prove more lucrative than improving customized cross selling.
Miller cited PayPal as an example. PayPal frequently offers 5% or 10% off a product or service, based on a consumer’s transaction history. Merchants can target these offers at a subset of clients that meet certain types of criteria.
“There is a sense in which we are already receiving targeted advertising,” Miller said. “It comes in the form of cash back or a percentage off, or multiple reward points. It’s a little different than what we think of as advertising, more like targeted mail coupons. But we’re likely to continue to see more of this.”
These innovations have the potential to impact the payments industry long-term, reshaping how payment products are developed and experienced. They are also changing how authentication takes place and repositioning the payment within an overall value chain. As technological capabilities and regulatory landscapes become more certain, the nature of all these impacts will become clearer.
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