2025 was the year a lot of uncomfortable truths finally surfaced in payments.
Approval rates plateaued. Fraud costs crept up. Card networks tightened the screws. And merchants especially those running subscriptions or operating in higher risk verticals started to realize that “optimizing payments” meant more than adding another retry rule or a new Payment Service Provider (PSP).
As we move into 2026, the payment stack is no longer just about getting a transaction approved. It’s about recovering revenue, reducing churn, and protecting Annual Recurring Revenue (ARR) growth in an environment where regulation, consumer behavior, and technology are all shifting at once.
At Paymend, we process and recover failed transactions every day. We see where money leaks out of businesses and more importantly, where it can be pulled back in. In this article, we’ll break down the key trends shaping the payment industry in 2026, what they actually mean in practice, and how merchants should be thinking about their payment strategy going forward.
A quick look back: what 2025 changed
To summarize 2025 in one sentence, it would be: payments stopped being forgiving. Card networks pushed harder on compliance. Fraud tooling became table stakes rather than a differentiator. And approval rates especially for cross-border and subscription traffic became more volatile. Merchants learned the hard way that:
- A failed payment is not a “lost cause” it’s a delayed decision.
- Network rules like VAMP aren’t theoretical; they directly affect revenue.
- Retention is now as much a payment problem as it is a product or marketing one.
Those lessons set the stage for what’s coming next.
1. Agentic commerce and AI-driven payments
AI in payments isn’t about chatbots or dashboards anymore. In 2026, it’s about decision-making at the transaction level. Agentic systems can:
- Decide when to retry a payment,
- Choose how to retry it (method, routing, timing),
- Adapt automatically based on customer behavior and network signals.
This matters because static retry logic is fundamentally broken. Customers don’t behave in fixed patterns, and neither do banks. Payments need to respond dynamically or they fail unnecessarily.
The shift: From rules-based payments to adaptive, self-optimizing payment flows.
2. Variable Recurring Payments (VRP) and Pay-by-Bank
Subscriptions are changing. Fixed monthly billing is giving way to variable recurring payments, especially when combined with pay-by-bank rails. Why?
- Lower fees,
- Fewer chargebacks,
- Better acceptance for certain customer segments.
But this only works if payments are flexible. Merchants need systems that can:
- Adjust amounts,
- Change timing,
- Recover failed bank payments just as intelligently as card payments.
The shift: Pay-by-bank doesn’t eliminate failure, it changes how, where and why it happens.
3. Network regulation gets real (VAMP and beyond)
In 2026, ignoring network rules will be expensive.
Visa’s VAMP framework is part of a broader trend: networks enforcing responsibility downstream. If your approval rates, dispute ratios, or retry behaviour look unhealthy, you’ll feel it through monitoring programs, fees, or worse. This forces a mindset shift:
- Declines aren’t just a revenue issue,
- They’re a compliance signal.
The shift: Merchants who actively manage failed payments will be better positioned than those who let them pile up quietly.
4. Stablecoins and crypto move from “optional” to “useful”
Crypto isn’t replacing cards in 2026 but stablecoins are becoming operationally relevant. Use cases we’re seeing:
- Cross-border settlement (stablecoins offer reliability where traditional rails still struggle),
- Faster treasury movement,
- Reduced dependency on single banking rails
The shift: The winners won’t be the ones “going all-in on crypto,” but those integrating it selectively and pragmatically.
5. Biometric authentication and Passkeys go mainstream
Passwords are dying. Biometrics and passkeys are becoming standard.From a payments perspective, this matters because:
- Authentication friction directly impacts conversion,
- Better authentication reduces false declines,
- Fraud prevention becomes less intrusive for legitimate users.
The net effect: higher approval rates without higher risk, what the industry has chased for years.
6. Network tokens become the default
Network tokenization is no longer a “nice to have.” In 2026, it’s becoming the baseline. Tokenized credentials:
- Expire less often,
- Update automatically,
- Reduce unnecessary declines.
But tokens alone don’t solve failed payments. They reduce one class of failure — they don’t address timing, routing, or customer intent. That’s where recovery layers still matter.
7. Recovery beats optimization
This is the most important shift of all.For years, the industry focused almost exclusively on pre-transaction optimization. In 2026, the smart money is moving post-decline. Why?
- A meaningful percentage of customers still want to pay after a decline,
- Most merchants give up too early,
- Recovering existing demand is cheaper than acquiring new demand.
At Paymend, we see this every day: revenue that was written off as “lost” simply because no one followed up properly.
What this means for merchants?
If you’re running an online business in 2026, especially one driven by subscriptions or recurring payments, here’s the reality:
- Failed payments are a retention problem,
- Payment strategy is now a growth lever,
- Recovery is just as important as prevention.
Businesses that treat declines as final will fall behind those that treat them as recoverable events.
The payment industry in 2026 will reward merchants who understand one thing clearly: not all declines are equal, and not all revenue is gone forever.The businesses that win won’t necessarily have the fanciest stack, they’ll have the most resilient one.
- Payments are becoming adaptive, not static,
- Pay-by-bank and tokens reduce friction, not failure,
- AI-driven recovery will outperform manual retry logic,
- Recovering revenue beats chasing new traffic.
If you want to understand how much revenue you’re leaving on the table and how much of it can realistically be recovered, talk to us.
At Paymend, we specialize in recovering online payments that traditional systems give up on.
