October 5, 2025
We wrote our internal analysis of 2025 retail trends in January. Eight months in, here is what held up, what we got wrong, and what it means for merchants heading into 2026.
We predicted that mid-market retail would face increased pressure from both ends — low-cost platforms from Asia on one side, premium European brands on the other. This held. What we underestimated was the speed of the compression. Merchants who built their competitive position on price alone have had a difficult year. Merchants who anchored to quality, story, or service have largely held their margins.
We expected Africa-bound transaction growth. We did not expect the volume increase from European merchants selling into Vietnam, Indonesia, and the Philippines. The growth came from younger consumers in those markets who were actively sourcing European goods online. The category skewed heavily toward fashion, cosmetics, and food products with European provenance claims.
Merchants who added two or three local payment methods per market — beyond Visa and Mastercard — saw measurable conversion improvements. This was not a surprise conceptually. The surprise was how large the effect was in markets we considered well-served by cards. Digital wallets in Southeast Asia and mobile money in Africa drove checkout completion rates that card-only checkouts could not match.
We expected 2025 to be relatively stable from a regulatory standpoint. It was not. Three significant compliance updates hit European cross-border merchants: ICS2 Phase 2 expansion, updated VAT rules for digital-physical hybrid products, and new data localization requirements in two key markets. Merchants who had automated compliance tools absorbed these changes without disruption. Merchants on manual workflows spent significant time on remediation.
Buyers want to know exactly where their parcel is and exactly when it will arrive. This expectation, which was elevated by the pandemic-era e-commerce surge, has not normalized back down. Merchants who provide real-time tracking and proactive delivery notifications continue to have lower return rates and higher repeat purchase rates. It is not a differentiator anymore — it is a baseline expectation.