State of the North American Payments Industry 2026

Executive Summary

The North American payments industry continues to expand despite economic uncertainty, higher interest rates, and increased regulatory scrutiny. Digital payments remain the dominant form of commerce, while embedded payments, software-led distribution, AI, and continued industry consolidation are reshaping how payment companies compete and how portfolios are valued.

The United States remains the world's largest card payments market, while Canada continues to demonstrate one of the highest rates of contactless payment adoption globally. Private equity and strategic acquirers remain active buyers of payment businesses, although valuation premiums increasingly favor higher-quality portfolios with strong growth, low attrition, and defensible merchant relationships.

At a Glance

The North American Payments Market Keeps Expanding

The United States remains the largest card payments market in the world.

EMARKETER forecasts U.S. card network transaction value will exceed US$13.5 trillion in 2026, highlighting the enormous scale of the ecosystem supporting issuers, acquirers, processors, ISOs, and payment software providers.

Canada continues to experience steady growth as digital payment adoption accelerates.

Payments Canada reports:

• 22.5 billion retail payment transactions
• C$12.2 trillion total payment value
• Digital payments represent 86% of payment volume
• Digital payments account for 77% of payment value

Cards Remain Dominant — But the Mix Is Changing

While alternative payment methods continue to grow, cards remain the foundation of commerce.

Several trends are reshaping the market:

• Digital wallets continue gaining share.
• Contactless has become the default checkout experience.
• Embedded payments reduce friction by moving payments inside software.
• Real-time payment infrastructure continues expanding.

In Canada:

• Contactless represents 58% of retail transactions.
• Credit cards account for roughly one-third of all retail payments.

Embedded Payments Continue Reshaping the Industry

The biggest structural shift in payments is no longer mobile wallets — it is embedded payments.

Software companies increasingly own the merchant relationship while payment infrastructure becomes invisible to the end customer.

Benefits include:

• Higher software retention
• Additional recurring revenue
• Better customer experience
• Greater enterprise valuations

Industry researchers estimate the embedded payments market will grow from approximately US$51 billion in 2026 to more than US$430 billion by 2033, representing one of the fastest-growing segments in financial technology.

Consolidation Continues Across the Industry

Mergers and acquisitions remain one of the defining characteristics of the payments industry.

Recent years have seen continued acquisitions involving:

• ISOs
• Merchant portfolios
• Embedded payments companies
• Payment software providers
• Processor infrastructure

Private equity remains active while strategic buyers continue acquiring technology that strengthens software integration and recurring revenue.

Recent examples include the reported sale process involving Moneris and discussions around payment network assets owned by Fiserv.

AI Is Beginning to Reshape Payment Businesses

Artificial intelligence is rapidly moving from customer support into core payment operations.

Emerging use cases include:

• Merchant underwriting
• Fraud detection
• Customer onboarding
• Risk monitoring
• Portfolio analytics
• Sales automation
• Merchant support

Payments Canada reports that 64% of business leaders are exploring agentic AI, and more than one-quarter of Canadians are comfortable receiving AI-assisted shopping support.

Portfolio Quality Matters More Than Size

Perhaps the biggest change for buyers is that monthly residual alone no longer determines value.

Institutional buyers increasingly evaluate:

• Merchant attrition
• Processor relationships
• Merchant concentration
• Revenue diversification
• Embedded software exposure
• Portfolio growth
• Contract portability

What Buyers Are Looking for in 2026

Today's buyers increasingly favor businesses with:

• Predictable recurring revenue
• Strong processor relationships
• Low merchant concentration
• Software integration
• High retention
• Clear ownership rights
• Professional reporting

Businesses dependent on a handful of merchants or weak contractual rights increasingly trade at discounts.

Outlook

The payments industry remains one of the most attractive recurring revenue sectors in North America.

Although pricing pressure, regulation, and new technologies continue to reshape the market, the industry's long-term fundamentals remain strong.

The next several years are likely to be characterized by:

• Continued consolidation
• Greater adoption of embedded payments
• Increased use of AI
• Expansion of real-time payment infrastructure
• More institutional investment in payment assets
• Continued migration toward software-led distribution

Key Takeaways

• North America remains the world's largest payments market.
• U.S. card payment value is expected to exceed US$13.5 trillion in 2026.
• Canada processed 22.5 billion retail payment transactions worth C$12.2 trillion in 2024.
• Embedded payments continue to be one of the fastest-growing areas of fintech.
• Industry consolidation remains active among processors, ISOs, and software providers.
• Buyers increasingly pay for portfolio quality, not just monthly residuals.

About ResidualMatch Research

ResidualMatch Research produces independent analysis on payment portfolio valuation, merchant acquiring, ISO and PayFac economics, and M&A activity across the payments industry. Reports are written for owners, operators, acquirers, and advisors evaluating opportunities in the merchant services market.