2026 promises to bring continued change, challenges and opportunities for financial institutions as they navigate their payment portfolios. Strategic consultants at Advisors Plus, a Velera company, have shared their perspectives on emerging trends and what financial institutions should anticipate in the year ahead.

Relationships have become key to payments. Financial institutions are increasingly broadening their offerings to deepen cardholder relationships. At the entry level, fintechs such as Cash App have evolved from simple peer-to-peer (P2P) payments apps to creating closed-loop merchant networks and now issuing their own debit cards with rewards. Others have extended traditional checking and debit relationships into savings by bundling high-yield offers. Larger financial institutions, like Bank of America, go even further by integrating credit cards into their programs. Through its Preferred Rewards program, clients with qualifying deposit and investment balances can significantly boost credit card rewards — turning a standard 1.5% cash-back rate into as much as 2.625% at the highest tier. Expect this trend to accelerate as fintechs seek improved profitability and established financial institutions deepen their engagement strategies. This will result in the more immediate need for product refreshes, since many financial institutions are competing with product structures often created years ago.

– Tom Bennett, Manager, Payments & Deposits Consulting

Debit card innovation is occurring faster than ever. After years of minimal attention, debit card enhancements are quickly gaining momentum. Historically limited to merely a payment instrument, debit card rewards are experiencing a resurgence. Airlines and hotels — once the domain of credit card rewards — are now offering debit card rewards for miles and points. Buy Now, Pay Later (BNPL) installment functionality is gaining popularity, as payment plans are built right into qualified debit purchases. Financial institutions are also bundling debit with a full suite of rates and rewards, including high APYs, no fees and rich rewards. Expect innovation to surge as competition for debit card volumes continues to intensify.

– Chris Moore, Strategic Consultant

Credit card rewards need differentiators. Credit card reward programs are evolving as issuers respond to shifting consumer preferences and economic pressures. In 2026, instant value options like “shop with points” and the continued dominance of cash-back remain key differentiators, while personalized and customizable rewards structures gain traction. Everyday spending categories — such as groceries, gas and streaming — are now prioritized over travel and entertainment, reflecting changing consumer payment habits. Gamification strategies, notably Bilt Rewards, are redefining loyalty by turning rent payments into a rewarding experience. However, devaluation risks persist in travel-related programs, and basic rewards cards could face potential elimination amid rising consumer expectations and interchange cost pressures caused by the pending Visa and Mastercard merchant settlement. In 2026, competitive offerings should highlight flat-rate cash-back and tiered rewards as issuers strive to strike a balance between simplicity, flexibility and profitability.

– Michelle Hillenbrand, Senior Strategic Consultant.

Leverage direct deposit to capture the payment relationship. Direct deposit remains an essential service for financial institutions seeking to secure the primary payments relationship with cardholders, as it drives debit card usage, engagement and loyalty. Credit unions trail big banks and fintechs in this area, with only 60% of checking accounts utilizing direct deposit, compared to 80% of big banks and 75% of fintechs (according to data from Nacha, as well as a data analysis of Velera debit processed credit unions by Advisors Plus). Banks and fintechs win by encouraging direct deposit activity through perks like early pay, ATM fee waivers, high-yield savings accounts or premium overdraft protection. Early pay, which allows accountholders to receive their direct deposit pay up to two days early, is now expected by consumers and is especially appealing to younger generations, gig workers and lower-income households. Early pay is a worthwhile opportunity for growth, as not all financial institutions currently offer it. By introducing early pay and similar incentives, financial institutions can market and capture direct deposit, become members’ financial hub and deliver everyday value that strengthens relationships and grows checking accounts.

– Kari Anne Arnosk, Senior Strategic Consultant

Understand and know your credit card profitability drivers. Understanding the profitability of your credit card portfolio and its key drivers is essential for making informed strategic decisions, particularly in light of the pending Visa and Mastercard interchange settlement. A clear view of profitability for both consumer and business portfolios enables you to identify which product structures and expense components contribute most to overall performance, positioning your financial institution to respond effectively to changes in interchange economics. This insight enables financial institutions to proactively make adjustments, such as revising product structures, implementing pricing strategies or reducing operational expenses to maintain profitability and competitiveness in a shifting regulatory and cost environment.

– Brad Wylie, Senior Strategic Consultant

Alternative payment methods are here to stay. Mobile wallets and peer-to-peer (P2P) payments continue to solidify their role in today’s payment landscape. As we move further into 2026, offering these now-essential options alongside strong credit and debit offerings is no longer optional — it’s expected. But alternative payment methods offer more than just new ways to pay. They reveal what consumers truly value: flexibility, speed, personalization and user-centric design. Consumers now expect that same flexibility and innovation from all payment products and services.

Financial institutions should assess their payment ecosystem and ask — does this offering deliver flexibility? Speed? Personalization? Is it innovative in an environment where alternative choices are a click away? Key touchpoints to evaluate include account onboarding and application, account and credit card decisioning, and payment and repayment methods.

– Paige Watkins, Senior Strategic Consultant

Proactive trend monitoring will drive strategic success. In 2026, anticipated reductions in the Prime Rate and the potential impact of the Visa and Mastercard interchange settlement will require financial institutions — particularly those with non-variable pricing — to reassess credit card pricing strategies. To remain competitive, mitigate risk and protect margins, financial institutions must consider multiple factors. These adjustments often involve a Change in Terms, which comes with lengthy lead times for regulatory notifications, compliance reviews, product updates and marketing communications. This is a good reason why financial institutions must monitor market trends closely this year and begin planning early to maintain profitability and operational readiness.

– Chaun Heywood, Senior Strategic Consultant

Continued diligence is key to portfolio success in 2026. With rates declining, losses still elevated and ongoing threats to interchange, now is the time to review pricing strategies, especially for higher-risk cardholders and transactions. With the growth of sports betting and legalized gambling, ensure cash APRs are set to cover risk and consider limiting cash lines to reduce the potential amount of risk. These adjustments — along with regularly scoring your portfolio to monitor shifts in cardholder risk and actively managing credit lines — will help strengthen portfolio performance and safeguard profitability.

– Shannon King, Senior Strategic Consultant

Building a forward-focused, future-ready financial institution. Today’s financial landscape — marked by economic volatility, shifting regulatory expectations, changing consumer behavior and the constant need for product enhancements — demands more than just incremental change.

For financial institutions to thrive in 2026, they need clear plans for growth and adaptability. For those approaching the $10 billion threshold, for example, priorities might include implementing an Enterprise Risk Management (ERM) framework, enhancing compliance oversight through a dedicated committee and refining processes to manage interchange and deliver cross-product journeys across the consumer lifecycle.

Proactive planning and agility are essential as conditions evolve. This helps financial institutions measure their progress, identify deviations from the path and apply corrective measures when needed to successfully achieve their long-term vision. Capital planning — supported by the right process, tools, people and strategic partnerships — turns long-term vision into real, actionable strategies that deliver results. A practical first step? Creating a timeline of key milestones and planning out what to tackle first.

– Katie Kean, Manager, Payments & Deposits Consulting

These insights reflect the perspective of our Advisors Plus consulting team as we look ahead to 2026. If you would like to continue the conversation, you can connect with our experts here.