Verisave offers its take on the landscape for the card brands in 2025.
The payments industry is in constant flux. While it’s critical to react quickly to card brand updates and major processor activities, it’s also important to anticipate some of the changes that have yet to occur.
Here’s what we expect from the year to come:
Capital One’s acquisition of Discover, if approved, will change the competitive landscape.
In December 2024, Capital One announced that it had received approval from the Office of the Delaware State Bank Commissioner to acquire Discover Financial. In 2025, Federal regulators will weigh in on the proposed acquisition. If approved, the combined company will become the largest credit card issuer in the US by loan volume and will become a more formidable player in the industry. It remains to be seen if Capital One will try to shift some of its cardholders away from Visa and Mastercard to Discover cards.
The card brands will continue to be mired in litigation.
Litigation and regulatory action against the card brands will continue in 2025 as efforts undertaken by the card brands in 2024 to settle or quash litigation were not entirely successful.
Perhaps the biggest unresolved case is the antitrust suit against Visa and Mastercard which remains in limbo after the proposed $30 billion antitrust settlement agreed to by Visa, Mastercard and plaintiff’s attorneys was rejected by a judge who found that the settlement disproportionately favored small, local merchants.
American Express also faced a setback when a judge refused to block a proposed class action suit against the company which accuses it of inflating fees charged to merchants. While Discover did enter into an agreement to settle class action lawsuits from merchants regarding a card product misclassification which caused them to pay higher fees, it is under investigation by the Securities and Exchange Commission (SEC) for the misclassification and was required by the SEC to restate its 2024 quarterly filings and its 2022 and 2023 annual filings.
Other notable suits include a civil antitrust lawsuit filed by the Justice Department against Visa in September 2024, which accuses the company of monopolization and other unlawful conduct in debit network markets in violation of the Sherman Act.
The card brands will likely be cautious regarding rate increases.
As it is in the card brands’ interest to settle ongoing litigation and mitigate regulatory scrutiny, they are likely to be cautious regarding rate increases to avoid undermining their position. Visa exhibited this behavior in 2024 when it cancelled some interchange increases that had been scheduled to go into effect a few weeks after it and Mastercard announced a proposed $30B settlement for an antitrust case.
Fraud prevention will continue to be an area of focus.
The card brands will continue working to employ AI, biometrics and other technological advances to thwart fraudsters, who continue to become more sophisticated and technically savvy. Recent advances include Visa’s 2024 enhancement of Visa Account Attack Intelligence (VAAI) service with the addition of the VAAI Score which harnesses generative AI to provide a real-time risk score that helps detect an enumeration attack. Mastercard announced in 2024 that use of generative AI has enabled it to double the speed at which it can detect potentially compromised payment cards. American Express is using AI to fight fraud by using deep learning in advanced models that detect anomalous patterns in transactions. Discover uses AI in fraud detection models, as well.
Innovation allowing more flexible payment options will continue to be an area of focus.
Innovation to provide cardholders with more payment options will continue to be an area of focus in 2025. Examples include Mastercard’s expansion of its installments program to new Merchant Category Codes (MCCs). This functionality allows issuers to provide cardholders the flexibility of splitting the cost of a purchase into installment payments. Visa is also continuing the global roll out of Visa Flexible Credential, a new kind of debit card that allows a single card product to toggle between different payment methods including debit, credit and buy now pay later. The program launched in the US in November 2024 in partnership with Affirm, and allows eligible consumers to choose between paying in full or opting for a BNPL option directly from the Affirm app.
If your business is looking to better manage your merchant account or reduce fees, we’re here to help. We fix and monitor your existing merchant account, and we bring that money back to you. No need to change processors or add a project to your team’s already hectic workload. Schedule a consultation today.
Verisave is a third-party cost-reduction firm specializing in merchant accounts and credit card processing fees.
Verisave is not a payment processor, and is not affiliated with any processors, card brands, or banks.
Verisave has more than 20 years of experience optimizing and monitoring the credit card processing industry.