In today’s high-tech digital world, merchants seek speed, flexibility, lower costs, and an enhanced customer experience from the payment processing service provider. According to Capgemini‘s World Payments Report 2026, Small and mid-sized merchants are increasingly looking to shift from banks to PayTechs (companies that offer payment-processing and technology solutions). About 40% of such merchants are preparing to move their business to PayTech providers.
According to the study, satisfaction levels among merchants using banks’ payment services have plunged to historic lows. Only 15% of small businesses and 22% of mid-sized firms say they are satisfied with their banks’ offerings.
In contrast, PayTechs, agile firms offering digital-first payment solutions, are rapidly gaining traction thanks to faster onboarding, lower costs, and modern infrastructure.
The report says banks are not focusing enough on helping merchants with their payment services. Banks are worried about margins, complex tech processors, and facing high operational costs. Because of this, PayTechs are stepping up to help businesses.
The report shows that while 70% of merchants want reliable and successful payment systems, only 19% of banks believe they can provide these services well.
Similarly, 69% of merchants want quick and easy signup processes, but only 13% of bank leaders feel their banks can meet this need.
Merchant’s onboarding process is also a major challenge for banks. The whole process can take up to seven days and cost nearly $500. In comparison, PayTechs can help merchants start accepting payments in less than an hour for about $214.
This slow process causes frustration for merchants, making them lose money and consider switching to other providers.
Jeroen Hölscher, a leader in payment services at Capgemini, said, “Many banks are focusing more on issuing cards instead of bringing in new merchants. This leaves room for quicker, tech-savvy companies to take over the market. With 40% of merchants looking for new options, banks really need to make things easier and faster for them. They should also explore new technologies like Generative AI. By putting merchants at the center of their business plans, banks can compete better with PayTechs.”
When it comes to innovation, PayTechs are moving faster than banks, creating a big gap between them. For instance, 70% of PayTechs use payment orchestration, which helps to route transactions intelligently, whereas only 47% of banks do this.
Additionally, 60% of new PayTech companies are using Generative AI, compared to just 41% of banks.
PayTechs are also adjusting to new rules better, with nearly half focusing on Central Bank Digital Currencies and digital identities, while only 23% and 38% of banks are doing the same.
Banks also need to improve in areas like fraud prevention and payment processing. Only 26% of bank leaders feel confident about advanced fraud prevention and data security, causing merchants to lose about 2% of their total revenue to payment fraud and experience up to 9 hours of downtime each year due to unreliable systems.
Around the world, instant payments and digital wallets are becoming more popular, rising from 13% in 2020 to 25% in 2024.
Meanwhile, the use of cards in payments is likely to drop from 65% to 52% during the same time, even as the total number of card transactions continues to rise.
Despite the grim outlook, the report suggests that banks still have an opportunity to regain ground. Nearly two-thirds of merchants indicate they would prefer to work with traditional financial providers if those providers modernize their offerings. Streamlined onboarding, embedded value-added services such as loyalty programs, and stronger sector-specific integrations could tilt the balance back in banks’ favour.
Visit here for the full World Payments Report 2026 report.
Report Methodology: The World Payments Report 2026 draws on insights from two primary sources – the global payment executive survey 2025 and the global Merchant surveys and interviews 2025. These primary research sources cover insights from 15 markets: Australia, Brazil, Canada, France, Germany, Hong Kong, India, Italy, the Netherlands, Poland, Singapore, Spain, Sweden, the UK, and the United States.
