by Matt Rej
A bunch of major payment processors already reported earnings this week. Fiserv, Global Payments, PayPal, and Toast all dropped their 1Q26 results within a four-day stretch.
This is on the heels of Visa and Mastercard’s earnings that I covered last week, though the impact here is significantly more important for merchants. While the card networks set the floor on what processors pay, your processor ultimately determines your markup, and these quarterly results are often key indicators of how costs will be passed to merchants.
When a processor’s growth slows or margins get tighter, someone has to make up for that difference to appease investors. And that someone is almost always the merchant.
I listened to the earnings calls and pulled out the parts that actually matter to businesses that accept credit card payments from these providers. Here’s what you need to know.
Common Themes Across All of These Processor Earnings Calls
One thing that jumped out to me was that certain topics kept showing up regardless of which executive was talking. All of these providers mentioned:
Value-Added Services (VAS) Getting Pushed Harder — Every processor talked about VAS as a growth lever. Whether it was Fiserv’s Clover VAS revenue or Global’s “cross-sell” emphasis on Genius, VAS is always corporate speak for focusing on additional fees beyond core processing.
AI and Agentic Commerce Are Being Framed as New Revenue Streams — Toast openly said they are exploring new pricing models for its AI assistant (likely usage-based). When processors invent new product categories, they’ll simultaneously invent new ways to bill for them.
Hardware Costs Are Getting More Expensive — Fiserv said they pre-bought inventory to help prevent margin hits in the short term. And Toast directly called out memory chips and tariffs as pressure on profitability in 2027.
Second Half Changes — Phases like “margin expansion” in the back half of the year are likely. Executives tell this to investors as assurance for recovery.
Fiserv 1Q26 Merchant Impact
Fiserv came into this call under pressure. They recently made some important new executive changes after posting disappointing results in both 3Q25 and 4Q25.
Though the changes didn’t lead to instant recovery.
- Fiserv had the worst quarter of the processors on this list (organic revenue down 4% and operating margin down 810 bps).
- Management is guiding margins up 4 points in the back half of 2026.
- Clover VAS revenue grew 18% and is outpacing Clover itself (the bright spot for Fiserv).
- They already announced new rate increases for July, and I’m wondering if we’ll see another one around November (similar to last year).
CEO Mike Lyons specifically told investors that operating performance will be “more fully visible” in the second half of 2026 and into 2027. Fiserv’s CFO followed by saying that 1H operating margin guidance is 31-32% and 2H adjusted to 35-36%.
A four-point margin expansion like this can obviously come from cutting costs. But mostly, it comes from fee adjustments and rate optimization on the merchant side.
Fiserv’s Clover VAS is one detail that I’m paying close attention to. It now makes up 27% of total Clover revenue (growing faster than Clover overall). Meaning software fees and other add-ons are doing more heavy lifting compared to the processing itself.
So there’s lots of markup hiding on Clover statements right now that I think merchants need to start paying closer attention to.
Key Takeaways from Global Payments 1Q26 Results
Global Payments is telling a much different story than Fiserv. CEO Cameron Bready told investors that the Worldpay merger is giving them the scale and resulting in outcomes that neither company could have achieved on its own.
Worldpay’s US sales team started selling Genius practically immediately after the deal closed. And Subway (an existing Worldpay client) just signed up for the Genius Kitchen Management Software across 2,500+ locations.
- Global had a strong quarter overall, with revenue up 4.5% and margins up 110 bps.
- They are leaning into cross-sells for Worldpay clients.
- Genius yields with new clients increased 30% YoY.
- Plans to cut $600M in costs over three years.
“Yield” is a polite word for what merchants pay. So a 30% jump isn’t something that just happened by accident here.
Global and its subsidiaries are selling Genius and pricing products accordingly to earn a nice profit.
Existing Worldpay merchants need to be careful here. Especially for larger, enterprise-level businesses that sales reps might be targeting with extra services.
But I also think that any merchant under a Global brand could be impacted by Global’s plans to cut costs in the coming years. While some of this can obviously happen through layoffs or consolidating systems, there’s a good chance some businesses may get migrated to newer (and more expensive) payment stacks.
Global officially got rid of the Heartland name at the end of last year. So I’m wondering if some of these older, legacy solutions will start to follow suit as part of this broader cost-reduction focus.
Merchant Impact From Toast’s 1Q26 Earnings
Toast had the strongest quarter on the list. But two things should still be on your radar if this is your payment processor:
- Hardware — Toast told investors that they’re pre-buying memory chips and increasing inventory because of supply pressure and tariff impacts.
- AI Pricing — Toast IQ Grow bundles a marketing AI agent, account manager, and several existing Toast products for $499 per month, but Toast is considering moving to a usage-based pricing model (that would be more expensive).
If you’re planning to get a bunch of new Toast hardware, I’d get it sooner than later. Based on what they’re saying about higher hardware costs, I think now is the time if you need new handhelds, kitchen display units, or anything that’s going to be a significant expense for your business.
Obviously a single handheld device isn’t going to make or break you. But if the cost goes up 15% or 20% in the next 12 months and you need to get all new systems for a multi-location chain, then this absolutely matters.
AI pricing is completely new territory as we’re talking about a category that didn’t really exist in the past. It’s a VAS, but a specific type that can uniquely be charged based on how much you use it (which management actively said they’re exploring).
There’s no industry standard for what this should cost yet. So I’d just be careful right now about which Toast IQ products you opt into and what the pricing structure looks like on your contract.
While they might be cool and fun to play with now (and maybe even deliver real results), they could get more expensive down the road and you won’t want to be in a position where they become operations-critical and you can’t function without them.
How PayPal’s Latest Earnings (1Q26) Affect Merchants
This was the first earnings call for Enrique Lores as CEO. I said a few months ago that he’d be under pressure to deliver immediate results, and he definitely came out swinging here.
Lores told investors that PayPal needs “significant changes to improve the strategic and operational issues the company has faced.”
- PayPal is reorganizing into three segments: Checkout Solutions, Consumer Financial Services/Venmo, and Payment Services/Braintree.
- They are planning to cut $1.5 billion in costs over the next 2-3 years.
- Explicitly shift in focus toward the “Consumer side” of networks and away from merchants.
- VAS is the path toward better margin on Braintree.
I found it really interesting and super important how Lores called out that PayPal has become too focused on merchants and needs to rebalance its focus toward consumers.
While it sounds semi-neutral on the service and not something you’d necessarily expect them to say, getting more profits from merchants is obviously still a priority.
CFO Jamie Miller said that PayPal needs to be “driving higher attachment of value-added services” to improve their yield (same playbook we’re seeing elsewhere).
I’ve also been a huge fan of Braintree over the years as their technology is great and fees have always been reasonable. So I’m hoping that there won’t be a huge impact here, but I won’t hold my breath. Any merchant using Braintree needs to closely monitor their statements to avoid falling victim to PayPal’s new profitability path.