The payments industry is undergoing a fundamental transformation, driven by AI, digital innovation and the convergence of new financial ecosystems. Mehdi Letaief, Principal at Arthur D. Little, Middle East, explores how these forces are reshaping payments infrastructure and redefining the future of global transactions.
The payments industry is no stranger to disruption. For decades, the sector has evolved in response to new technologies and customer expectations: cards replaced cash, online payments complemented physical transactions and mobile wallets added convenience to existing rails. We are entering a phase of structural reinvention, as multiple forces converge to reshape how we pay.
From clicks to code
In 2026, commerce is no longer exclusively human. Agentic commerce, where AI agents search, book and pay autonomously, is making the ‘click’ a thing of the past. This new market is generating millions of agent-led transactions and placing up to 20% of B2B sellers in direct contact with buyer bots. In response, payments infrastructure must adapt to serve not only customers, but algorithms too.
Out with the hard, in with the soft
Meanwhile, as humans make way for bots, physical acceptance infrastructure is being replaced by SoftPOS, QR codes and phone-to-phone payments. Acceptance costs are falling, barriers to entry are lowering and micro-merchants are joining the digital economy at scale, rendering dedicated hardware a relic of the past.
Your body is the barcode
As AI agents and QR codes spread, technology is becoming more human, with identification increasingly tied to the body. As authentication moves beyond PINs and passwords, bodies are becoming barcodes, with biometric-enabled cards approaching 20% penetration and palm or facial recognition scaling fast. Increasingly, trust will depend not only on convenience, but on how securely biometric data is governed.
Wallet wars
Alongside identification, digital wallets are evolving. No longer limited to card storage, ‘super wallets’ are integrating identity, transit, loyalty and mobile driving licenses, reducing churn among the 68% of users who are mobile only. For this tech-first user base, the wallet is the primary financial interface and a battleground for ecosystem control.
The rise of pay-by-bank
The super wallet isn’t the only contender challenging the dominance of cards. Checkout is moving away from card payments towards direct bank transfers. This trend is enabled by new US open banking rules and European regulatory momentum, with variable recurring payments beginning to scale commercially this year.
Death of the invoice
Like card payments, the days of manual invoices are numbered. Hardcopy and PDF-based reconciliation are being replaced by ERP-triggered, straight-through payments. As a result, B2B flows are becoming embedded and invisible, executed automatically within digital workflows. This points to a future where payments are a system feature, not a finance function.
Programmable money
As digital tech advances, payments are not just becoming faster, but intelligent too. Programmable payments allow money to carry instructions, automating escrow, tax splits, royalties and conditional disbursements, all in real time. Institutions that harness this logic layer will unlock new service models and revenue streams.
Stablecoins take centre stage
Parallel to this evolution, unregulated crypto speculation is giving way to compliant digital money. Stablecoins and tokenised deposits backed by real assets are scaling within regulated frameworks, supporting US$20–$30 billion in daily flows. Operating 24/7, these instruments challenge legacy settlement cycles and liquidity models.
Identity as infrastructure
Critical to many of these shifts is the transformation of identity itself. Platform-controlled credentials are being complemented by state-backed solutions, including European digital identity wallets that are expected to mature this year. Moving forward, identity will increasingly serve as core rails for KYC, onboarding and age verification.
The global real-time grid
From Europe to the Middle East, fragmentation is giving way to interoperability, with national payment systems converging through real-time interconnections. Already, networks such as Nexus and UPI are enabling cross-border transfers in under 60 seconds and expectations for instant global settlement will soon become the norm.
DeFi meets TradFi
Another gap is also closing: the once-clear divide between decentralised and traditional finance is narrowing as institutions experiment with tokenised treasuries, real-world asset collateralisation and hybrid liquidity models. The result is not disruption from the fringe, but convergence at the core.
A ‘scamdemic’ looms
From tokenisation to super wallets, the payment landscape is brimming with innovation, but innovation brings risk. Fraud tactics powered by Generative AI and synthetic identities are advancing and a ‘scamdemic’ looms unless institutions deploy equally sophisticated defence systems.
In isolation, each of these forces is disruptive. Collectively, they represent a fundamental re-platforming of the payments industry, an industry that no longer requires processors, but ecosystem orchestrators.
