The merchant acquisition space is shifting, according to Capgemini, as payment technology firms (PayTech) are emerging as viable competitors to banks.
The Capgemini World Payments Report 2026 revealed PayTech’s are “outpacing banks” when it comes to payment innovation due to their willingness to adopt Generative AI and other technologies to attract the attention of merchants.
The report found 60% of PayTech’s are leveraging GenAI to process payments for their merchant partners, compared to only 41% of banks which acknowledge integrating the technology.
PayTech’s are also outpacing banks when it comes to payment orchestration, which Capgemini views as a “critical enabler” of intelligent payment routing. Over two thirds (70%) of PayTech’s are deploying payment orchestration infrastructure to merchants, compared to 47% of banks, according to the survey.
A regulatory advantage
With PSD3 and the Verification of Payee mandate just around the corner, PayTech’s are poised to be better prepared to comply with regulatory requirements, according to the report.
PayTech’s are also positioned to focus more on regulation pertaining to stablecoins and other digital currencies, with nearly half (49%) of those surveyed prioritising compliance, compared to just 23% of banks.
These findings underline the overarching theme of Capgemini’s World Payments Report – businesses are shifting their loyalty. And nowhere is this more evident than within the small business arena, with more than 40% of all SMBs switching from their banks to PayTech providers for a variety of their services.
“As many banks focus on the card issuing business over merchant acquisition, gaps have emerged in servicing merchants, enabling agile, digital-first competitors to win market share,” said Jeroen Hölscher, Global Head of Payment Services at Capgemini.
Do banks need merchants anymore?
The report also hints at a world where merchants could eventually be superseded by PayTechs.
According to Capgemini’s findings, banks have slowly prioritised merchant needs less due to operational costs, increasingly complex infrastructures and margin compression.
The onboarding process for merchants to banks can be both costly and time consuming. The average cost to onboard merchants is $496 and can take up to seven days for the process to finalise.
This has enabled PayTech to provide cheaper and faster alternatives, which can onboard merchants in just under 60 minutes and less than half the cost banks charge at $214.
An increasingly digital-first payment sector has also seen merchants shift towards PayTech partners, in particular those who value high payment success and reliable infrastructure as their main priorities for customers.
Only 19% of banks feel confident in their own ability to deliver these services, according to the report, but 69% of merchants demand fast and seamless onboarding. Just 13% of banking executives believe their institutions are fully capable of delivering this service.
“With 40% of merchants on the move, the message is clear: banks risk falling out of the merchant ecosystem entirely,” said Hölscher
“To recover, they need to eliminate the friction that costs merchants time and money, and embrace the possibilities offered by Generative AI. Those who act swiftly and put merchants at the center of their strategy will be best placed to compete with PayTechs in a new era of commerce.”
Opportunities for banks
With PayTech’s seemingly closing the gap for merchant acquisition, Capgemini has identified areas where banks can enhance and consolidate their position in the market.
The report highlighted banks’ long-tenured trust amongst customers and working capital to be leveraged in order to attain merchant attention. Merchants have also recognised these strengths as to why many still remain partners with banks, citing strong brand reputation (78%), perceived stability and long-term presence in the market (49%), and broader suite of financial products (46%) compared to PayTechs.
Merchants appear willing to switch back to traditional providers if banks and payment providers can offer embedded, industry-specific value-added services, such as smooth integration with food delivery platforms for restaurants or seamless loyalty programs for retailers.
Eight in ten merchants also stated they would consider switching to a bank if it could offer all the services of a PayTech at the same cost.
In order for banks to achieve this, Capgemini is calling for a greater willingness to adopt technologies such as GenAI, as well as embedded finance services, to accommodate the digital-centric needs of merchants.
