MAG Insights

If you asked merchants across the industry to name their number one challenge right now, the answer wouldn't be a single technology or a single regulation. It would be the balance of delivering a better customer experience while managing transaction costs, keeping transactions secure, keeping fraud losses under control, and growing authorization rates. That balancing act has always been hard. In 2026, it's getting harder because every side of the equation is moving at once.

Why The Balancing Act Keeps Getting Harder

Payment form factors are multiplying, with pay-by-bank maturing into a viable checkout option, stablecoins are gaining legal clarity, agentic commerce is shopping and paying on consumers' behalf, and fraudsters are deploying their own AI tools faster than defenses can adapt. Each new rail or channel can boost customers’ experience, but they also introduce new fraud risks, authorization logic, and new cost structures that must be managed alongside existing systems.

An active payments-related regulatory and legal environment adds complexity, with key developments like the interchange settlement inching towards final approval, competing federal court rulings on how regulated debit fees should be calculated, a separate Federal Reserve (Fed) proposal on what entities can hold a master account at the Fed, an open question about the future of check processing, and a slow-motion migration of SNAP EBT to chip cards that varies state by state all coming to fruition this year.

However, these new form factors face hurdles to widespread adoption. Acquirer and orchestrator adoption, consumer trust and habit, dispute and liability frameworks, and basic point-of-sale integration still need to mature, and none has yet reached the volume needed to meaningfully compete with cards at checkout, which keeps the cost of accepting a payment elevated. Cards still set the price merchants pay, and until an alternative reaches genuine B2C scale, that isn't likely to change. These form factors are worth tracking and piloting, but they should be viewed as gradual, use-case-specific additions rather than a near-term fix for interchange costs. No single merchant can track all of this within the margins of a day job. That's exactly why staying plugged into the industry has become less of a nice-to-have and more of a survival skill. Below is where the major threads stand.

Payment Form Factors Are Multiplying

Pay-by-bank and real-time rails. The Clearing House's Real Time Payments (RTP) network and the Federal Reserve's FedNow Service together settled a combined $751 billion in the first quarter of 2026 (ClearingPost). FedNow's quarterly value already exceeds its entire 2024 annual total by more than sevenfold. For merchants, real-time payments represent an opportunity to foster competition in the payments ecosystem. However, most systems and transactions have focused on replacing check processing in a B2B environment, rather than creating a competitive alternative in the B2C space. MAG participates with industry bodies like X9 to develop standards for Account-to-Account transactions at the point of sale (POS). X9 has recently released a QR Code standard in hopes of increasing adoption.

Stablecoins are promising in specific environments but remain unproven at the register. The GENIUS Act, enacted in July 2025, directed federal payment stablecoin regulators to issue rules by July 18, 2026. Agencies like the Office of the Comptroller of the Currency (OCC), Treasury's Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC) have proposed rules on licensing, sanctions, and anti-money-laundering compliance for issuers (Debevoise & Plimpton; OCC; U.S. Department of the Treasury). Stablecoins are particularly promising for cross-border and B2B payments, where quick, low-cost settlement provides benefits. Their use in everyday consumer transactions remains unclear, though. Merchants should focus on these opportunities while cautiously monitoring consumer adoption timelines.

Agentic projections are more cautious than last year's forecasts. Merchants are testing infrastructure and gauging whether customers prefer to hand final purchase decisions to AI or use it for discovery, comparison, and research. The industry faces unresolved fundamental questions, like how an agent-initiated transaction should flow through the payments system, what data needs to travel with it, and who is responsible at each stage. (the consumer, the agent platform, the merchant, or the payment service provider). Card network rules and emerging interoperability protocols (ACP, UCP, AP2) are still catching up to answer those questions (Chargeflow). Some platforms are taking a defensive stance. For instance, eBay now prohibits agentic bots from operating on its marketplace without explicit permission (Payments Dive). MAG is monitoring these developments closely and is drafting an agentic commerce white paper on liability and transaction-flow questions.

Fraud AI attacks are increasing and evolving. More than 83 percent of enterprise merchants report rising "friendly fraud," while roughly 66 percent are using or planning to adopt AI-based fraud prevention tools (Business Wire). With internal chargeback-handling costs averaging $82 per dispute and external fees adding another $46 on top of lost merchandise, a reactive posture gets more expensive as fraud evolves (Mastercard). MAG is addressing this with a white paper highlighting the specific pain points causing the most merchant frustration in the chargeback process, and launching a cross-functional working group to develop practical solutions. (MAG Insights)

The Regulatory and Legal Environment Has Rarely Been This Active

The interchange settlement (MDL 1720). After more than two decades of litigation, class lawyers and Visa/Mastercard reached a proposed settlement in November 2025. U.S. District Judge Brian Cogan granted preliminary approval in June 2026, and the case now heads towards a final approval hearing on November 16, 2026 (CMSPI Global). The settlement would modestly reduce credit interchange rates, expand surcharging flexibility down to the card-brand and product level, and relax the "Honor All Wallets" rule, allowing merchants to decline certain digital wallets and premium or commercial card products. Merchant and retail trade associations have objected, arguing that the interchange relief is relatively small and changes in the rules have not gone far enough to create a more competitive environment.

Linney's Pizza and Corner Post: debit pricing at the circuit courts. Two district courts reached opposite conclusions on the scope and legality of Regulation II's debit interchange fee cap, and both rulings have been appealed. Linney's Pizza, LLC v. Federal Reserve is now before the Sixth Circuit awaiting a briefing schedule. The Corner Post case is before the Eighth Circuit. MAG joined the Retail Litigation Center, NACS, and other merchant associations in an amicus brief arguing that the current rule allows issuers to include costs Congress never authorized, inflating merchants’ fees in both cases (MAG Insights). These cases go to the heart of how debit interchange is calculated, providing a live, technical fight with direct bottom-line consequences.

Fed requests for comments on checks and account access. The Fed is considering two important issues merchants should pay close attention to. Recently, they issued a request for information on the future of Reserve Bank check services, driven by declining check usage and rising check fraud, with options ranging from modernizing infrastructure to winding the service down altogether (Payments Dive). In addition, following President Trump’s recent Executive Order, they are reconsidering a proposal to create a new "payment account" that would allow certain fintechs and nonbank payment companies to access Fed payment rails such as Fedwire and FedNow more directly, without a bank intermediary.  Comments on the payment account NPRM close July 27, 2026, as the Fed pauses new Tier 3 account-access decisions to finalize policy by year-end (Freshfields; SRM). Both proceedings could reshape who merchants ultimately transact with and how.

EBT chip migration and state-by-state complexity. California's chip rollout is complete, while Oklahoma and other states are in progress. Cards from different states may not work consistently at the terminal, so merchants are urged to rigorously test interoperability (MAG Insights). States can now apply for waivers restricting SNAP benefit purchases, with eight states currently having waivers and more expected, each defining restricted items differently (soda, candy, low-juice-content drinks, and more), complicating price management into a genuine multi-state headache, especially for merchants operating near state lines or selling online (MAG Insights). Additionally, a June court order halted waivers in five states may, with future agency plans to uncertain.

The Common Thread

New options competing at checkout, court cases reworking debit fees, the Fed rewriting who gets an account, and a patchwork state rollout of EBT chip cards show the ongoing balancing act of cost, security, fraud, and authorization rates, all moving simultaneously, and all of these topics affect the customer experience at checkout. No single lever can be optimized alone. Cost relief isn't quickly coming from new entrants, like pay-by-bank, stablecoins, and agentic commerce. Therefore, litigation, rulemaking, and negotiated settlements remain the focus for cost relief in the near term.

How to Stay Ahead

To stay on top of the numerous issues, the smartest thing any merchant can do is to build their network and information channels to keep ahead of these changes:

• Build your network. MAG Payments Conference 26 is September 27–30 in Nashville and remains one of the best places in the industry to compare notes with peers navigating the same issues.
• Get involved. If you're a merchant, joining a MAG committee puts you directly in the room where policy positions on issues are shaped.
• Stay informed. Sign up for the MAG Insights and Payments News for ongoing coverage as these topics develop.
• Track the standards conversations. MAG Merchant members can read the quarterly Payments Technology Industry Engagement Report on standards bodies for the technical and specification-level detail behind changes like EBT chip migration and emerging payment protocols.
• Join the webinar series. MAG's webinars go deeper on individual topics as they develop throughout the year. MAG webinars are open to everyone.

And if any of the topics above raise questions specific to your business, don't hesitate to reach out to me directly. I'm glad to talk through what any of this means for your operation.

Sources: ClearingPost, Superior Payments, Debevoise & Plimpton, OCC, U.S. Department of the Treasury, Chargeflow, Payments Dive, Business Wire, Mastercard, CMSPI Global, MAG Insights: A Look at the Legal Landscape, Yahoo Finance, Payments Dive: Fed check services, Freshfields, SRM, MAG Insights: EBT Chip Card Migration, MAG Payments Conference 26