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Last year, we presented Payment Stories to Watch for in 2024 and now provide the sequel to assess stories to watch for in 2025. 

Here we are…2024 was an interesting year filled with new rules, more rules possibilities, an election year, changes in the economy and the ongoing growth of instant payments. What shall 2025 bring? While we do not have a crystal ball or any inside information, we do follow trends and keep a close eye on the industry.

With that in mind, here are some possible financial industry and payment stories to think about as we head into 2025.

5. Will FedWire^® and/or the National Settlement Service Expand to Holidays or Weekends? During May of 2024, the Federal Reserve presented a Request for Comment (RFC) regarding the expansion of the Fedwire^® Funds Service and the National Settlement Service (NSS, the private clearings for ACH and checks) to expand beyond the banking days and process during weekends or holidays. As of this writing, they are still reviewing the more than 140 reported responses from the industry, along with a few public responses from various payment and banking associations, which liked the expansion of Fedwire^®, but were hesitant on expanding the NSS. 

6. What Happens to Regulatory Agencies Following the 2024 Election? We are NOT going to discuss politics in detail here, but the Senate and the Presidency have changed parties, and with a new president arrives new appointments to cabinets overseeing agencies. It’s a whole new set of eyes and ideas to reflect the priorities of the agencies. 

7. Has Inflation Been Tamed or Is It Hibernating? Usually, policy makers want overall prices to be between a stable 2-3%, which reflects naturally for increasing demand of goods and services growth along with population growth. Through October 2024, the overall Consumer Price Index was at a 12-month growth of 2.6%. While this appears to be within the threshold and lower than previous years, this downward push has been mostly reflective of gasoline prices and the used vehicle market seeing price declines of late. Prices of utilities, housing, transportation services and medical expenses are each more than the 2-3% annual growth range. If gas prices were to increase again, this would raise food prices, or if other factors cause price increases, it will pile on more inflationary concerns at a time when the Federal Reserve has been trying to reduce interest rates.

8. How Many Interest Rate Cuts Will Occur by the Federal Reserve During 2025?  When the Federal Reserve began cutting interest rates during September 2024, a 50-basis point cut at that, there were projecting “three more cuts” (75bp) to end 2024 and possibly up to five more separate 25bp cuts during 2025. However, as already mentioned, if there are inflationary challenges during 2025, that could cause the Federal Reserve to rethink their policy and reduce the number of cuts. 

9. What About the Credit Card Debt? Relating to questions 7 and 8, delinquencies on credit card debt continued to increase during 2024, which is likely a correlation to the higher cost of living. With the judicial pause on the Consumer Financial Protection Bureau’s (CFPB’s) credit card fee reform, the older rules are still in place for repayments of card debt. The Personal Savings Rate of the country has dipped below 5% during the Fall of 2024, after improving slightly to start 2024. If the consumer is tapped out, this could create some sluggish growth to start 2025. 

10. Where Will Same Day ACH Go Next?  During October 2024, Nacha proposed a new rule to add a 4^th Same Day ACH window for the industry to consider and comment on by December 2024. In addition to the 4^th window, Nacha’s Request for Comment (RFC) questions and presentation seemed to indicate a desire to revise other parts of Same Day ACH. That said, the received feedback to the RFCs could indicate when the 4^th window could get installed and what proposed rules about Same Day ACH could happen next. 

11. How Well Will the New R06 Rules for April 2025 Work?  Effective 4/1/2025, RDFIs will have up to 10 banking days from the ODFI’s R06 return request to respond with a decision (R06 return, partial funds to return, NSF) or a status update. By this time, they may be able to respond via Nacha’s Risk Management Portal as well. But how well with this process work? The R06 return request was the main tool that Nacha revised in order to retrieve ACH fraudulent funds that were sent to an RDFI. Previously, the RDFI wasn’t required to respond. This is new territory, so we’ll see how well it improves the ACH network and the RDFI’s role in receiving suspicious ACH credits. 

12. What Will Be the Response to the CFPB’s Implementation of Section 1033 of the Dodd-Frank Act of 2010?  During October 2022, the CFPB issued a final rule for section 1033, which required covered entities (like financial institutions) to make data and other information concerning a financial product or service obtained available to the consumer. This ruling will allow consumers to determine which third-party service providers would have access to their data, allows data sharing through APIs and requires institutions to provide data in a standardize format for seamless use by the consumer wherever they choose to utilize it, either with apps or other institutions. Open banking, for example, where consumers share their financial information through interfaces openly, could stand to benefit from this change. 

13. Will Overlay Services (or Apps/Wallets) Receive Regulatory Scrutiny? During late 2023, the CFPB proposed a rule to implement Dodd-Frank provisions to “nonbank companies” who offer financial services through payment apps or digital wallets on smartphones. We’re still waiting to hear on the final ruling of this proposed rule, as it could affect the top tier app and wallet providing companies. Many of these apps have the ability to hold consumer funds and even use a branded debit card to spend those funds, along with making online purchases without the involvement of a financial institution. 

14. Crypto Was Growing Significantly During Late 2024, Will That Continue for 2025? The price of Bitcoin started out as around $44,000 during January 2024 and grew above $90,000 through November. If it’s growing and gaining in popularity again, what will its use cases be in domestic and international markets? Will regulations specific to cryptocurrency and blockchain be forthcoming? Many investors and institutions have complained about the way this market has been regulated and interpreted by government agencies for years. Will that change for 2025, especially if this market grows further? 

15. How Much More Will Artificial Intelligence Grow During 2025? The practical uses of Artificial Intelligence (AI) keep growing and being incorporated into our everyday lives, on our devices, used heavily by search engines and being defined in our workplace processes. But how much will AI grow during 2025 to make an even bigger impact on markets and workplaces than it already has, whether you agree it was positive or negative? Either way, the train has left the station and with technology evolving quickly, so is the likelihood of AI usage increasing.