In an era where digital transformation is reshaping every aspect of commerce, the financial services industry finds itself at a critical inflection point. A deep dive into recent conversations with payments industry leaders for the “What’s Next In Payments Series: The Payments Circle of Trust Risk” reveals four defining themes that are reshaping how we think about trust, risk and innovation in payments:
As the industry grapples with these challenges, one thing becomes clear: trust is no longer just about relationships — it’s about resilience. Companies that can build both will be best positioned relative to their peers to define the next era of financial services.
The Trust Paradox: More Connection Means More Vulnerability
The democratization of financial services has created an unprecedented level of connectivity between banks, merchants and consumers. Open banking, for instance, allows consumers to link their bank accounts with third-party apps, providing personalized financial insights and services. Meanwhile, businesses are increasingly leveraging payment networks that facilitate instant cross-border transactions, and merchants are adopting sophisticated tools to offer frictionless checkout experiences.
This connectivity has democratized access to financial services, empowering previously underserved populations and creating a more inclusive economy. Yet, with great power comes great responsibility — and a greater attack surface. Fraud’s ability to permeate ecosystems once it has found a way in, it turns out, is the catch of digital transformation.
As Akbar Hussain, co-founder and general counsel at TerraPay, told PYMNTS, “It’s like if someone has a terrible accident in a swimming pool, it doesn’t affect the neighbor’s swimming pool. But if the neighbor has a COVID infection, it affects everyone.”
This systemic risk is forcing companies to rethink how they build and maintain trust in an ecosystem where a single breach can have cascading effects. Navigating this trust paradox will require not only technological innovation but also a cultural shift toward collaborative resilience.
“When we think of this interconnected, interwoven circle of trust,” as transactions flow domestically or globally, “the consumer has to be put at the center,” Featurespace Chief Operating Officer Tim Vanderham said.
The Paper Problem Won’t Die
In the race to turn risk management from a cost center into a source of strategic advantage, one payment mechanism stands out as a crucial barrier to overcome: the indefatigable paper check.
Despite the FinTech revolution, an astounding 75% of businesses still rely on paper checks — a vulnerability that’s costing the industry $24 billion annually in fraud losses, as experts told PYMNTS. This persistence of analog methods in a digital age isn’t just about resistance to change; it’s about the complex interplay of trust, convenience and risk management.
“There’s a lack of knowledge around the electronic payment methods are out there — and just how easy it can be to adopt them,” said Ernest Rolfson, CEO of B2B payments platform Finexio. In the meantime, he added, “there’s been an evolution, and increased sophistication, on the part of the fraud tactics as they relate to paper checks. So many companies have been burned by that. And with the sheer amount of paper checks that are out there, this is the highest risk vector.”
“We’re still working in a manual world when it comes to some forms of payments,” Mary Kay Bowman, executive vice president, payments and financial services for BILL, told PYMNTS. The reliance on a payment method that has been around for centuries greatly enhances the fraud risk confronting businesses, so much so that check fraud has become a $24 billion problem.
The Double-Edged Sword of AI Innovation
Artificial intelligence (AI) has emerged as both hero and villain in the trust narrative.
For businesses and financial institutions, AI offers unprecedented capabilities in fraud detection, risk management and operational efficiency. But for bad actors, the same technology provides a toolkit for launching increasingly sophisticated attacks. This duality creates a high-stakes battleground where the future of trust is being contested.
“Bad actors are leveraging technological advances such as generative AI to launch increasingly sophisticated attacks … preying on opportunities like product launches or exploiting regulatory changes. It’s a constant challenge,” Boost Payment Solutions Chief Compliance Officer Elly Aiala told PYMNTS.
This arms race is pushing companies to develop more nuanced approaches to security that balance innovation with protection.
“AI isn’t just about identifying risks; it’s about scaling solutions effectively,” Bill Wardwell, general manager at Coupa Pay and Treasury, told PYMNTS. “And while blockchain hasn’t fully transformed traditional workflows yet, its potential to automate and secure processes autonomously is promising.”
The growing arms race between defenders and attackers means that complacency is not an option.
The challenge, as always, lies in tipping the scales toward security and trust, ensuring that AI remains a force for good in the digital economy. By embracing a balanced approach — leveraging AI’s strengths while addressing its risks — businesses can work to navigate this paradox and build a more resilient future.
The Speed-Security Balancing Act
Among the most pressing challenge facing the industry is the emerging tension between instant gratification and robust security. There’s a “real-time mandate” in customer expectations, but also a critical need for friction in the right places.
Customers now expect transactions and services to occur instantly, whether it’s sending money across borders, accessing financial tools or verifying their identity for new accounts. Technological advances and the growing influence of consumer-centric industries such as eCommerce and ridesharing, which prioritize convenience above all else, drives this real-time ethos.
“People have become used to really instant payments,” Sunny Thakkar, head of global fraud, disputes and authentication products at Worldpay, told PYMNTS, adding that risk management traditionally required deliberate processes to ensure accuracy. “The challenge is maintaining a fast user experience while managing the inherent risks.”
However, the same immediacy that delights users also introduces vulnerabilities. Fast processes often bypass traditional checkpoints, reducing the time available to detect and mitigate threats.
Companies are responding with multi-layered approaches that embed security into the user experience rather than treating it as a separate function. This shift is giving rise to new platform models that handle everything from fraud prevention to compliance without sacrificing speed.
After all, as the experts told PYMNTS, not all friction is bad — when applied strategically, it can act as a necessary safeguard without derailing the customer experience.
