diff --git a/CHANGELOG.md b/CHANGELOG.md
index c9bc0b415cc..d5eca112446 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -3,6 +3,7 @@
 ## X.X.X
 ### Payments
 [Fixed][5308](https://github.com/stripe/stripe-android/pull/5308) OXXO so that processing is considered a successful terminal state, similar to Konbini and Boleto.
+[Fixed][5138](https://github.com/stripe/stripe-android/pull/5138) Fixed an issue where PaymentSheet will show a failure even when 3DS2 Payment/SetupIntent is successful
 
 ## 20.7.0 - 2022-07-06
 * This release adds additional support for Afterpay/Clearpay in PaymentSheet.
diff --git a/payments-core/src/main/java/com/stripe/android/payments/PaymentFlowResultProcessor.kt b/payments-core/src/main/java/com/stripe/android/payments/PaymentFlowResultProcessor.kt
index 1d22b2dfb05..5edd03c5d2d 100644
--- a/payments-core/src/main/java/com/stripe/android/payments/PaymentFlowResultProcessor.kt
+++ b/payments-core/src/main/java/com/stripe/android/payments/PaymentFlowResultProcessor.kt
@@ -61,7 +61,8 @@ internal sealed class PaymentFlowResultProcessor<T : StripeIntent, out S : Strip
             )
         ).let { stripeIntent ->
             when {
-                stripeIntent.status == StripeIntent.Status.Succeeded -> {
+                stripeIntent.status == StripeIntent.Status.Succeeded ||
+                    stripeIntent.status == StripeIntent.Status.RequiresCapture -> {
                     createStripeIntentResult(
                         stripeIntent,
                         SUCCEEDED,
@@ -73,11 +74,7 @@ internal sealed class PaymentFlowResultProcessor<T : StripeIntent, out S : Strip
                         result.clientSecret,
                         requestOptions
                     )
-                    val flowOutcome = if (intent.status == StripeIntent.Status.Succeeded) {
-                        SUCCEEDED
-                    } else {
-                        result.flowOutcome
-                    }
+                    val flowOutcome = determineFlowOutcome(intent, result.flowOutcome)
                     createStripeIntentResult(
                         intent,
                         flowOutcome,
@@ -151,6 +148,14 @@ internal sealed class PaymentFlowResultProcessor<T : StripeIntent, out S : Strip
         return succeededMaybeRefresh || cancelledMaybeRefresh
     }
 
+    private fun determineFlowOutcome(intent: StripeIntent, originalFlowOutcome: Int): Int {
+        return when (intent.status) {
+            StripeIntent.Status.Succeeded,
+            StripeIntent.Status.RequiresCapture -> SUCCEEDED
+            else -> originalFlowOutcome
+        }
+    }
+
     protected abstract suspend fun retrieveStripeIntent(
         clientSecret: String,
         requestOptions: ApiRequest.Options,
@@ -181,7 +186,7 @@ internal sealed class PaymentFlowResultProcessor<T : StripeIntent, out S : Strip
     )
     private suspend fun refreshStripeIntentUntilTerminalState(
         clientSecret: String,
-        requestOptions: ApiRequest.Options,
+        requestOptions: ApiRequest.Options
     ): T {
         var remainingRetries = MAX_RETRIES
 
@@ -283,37 +288,6 @@ internal class PaymentIntentFlowResultProcessor @Inject constructor(
             clientSecret,
             requestOptions
         )
-        requestOptions: ApiRequest.Options
-    ): PaymentIntent {
-        var remainingRetries = MAX_RETRIES
-
-        var stripeIntent = requireNotNull(
-            stripeRepository.refreshPaymentIntent(
-                clientSecret,
-                requestOptions
-            )
-        )
-        while (stripeIntent.requiresAction() && remainingRetries > 1) {
-            val delayMs = retryDelaySupplier.getDelayMillis(
-                3,
-                remainingRetries
-            )
-            delay(delayMs)
-            stripeIntent = requireNotNull(
-                stripeRepository.refreshPaymentIntent(
-                    clientSecret,
-                    requestOptions
-                )
-            )
-            remainingRetries--
-        }
-
-        if (stripeIntent.requiresAction()) {
-            throw MaxRetryReachedException()
-        } else {
-            return stripeIntent
-        }
-    }
 
     override suspend fun cancelStripeIntentSource(
         stripeIntentId: String,
diff --git a/payments-core/src/test/java/com/stripe/android/model/PaymentIntentFixtures.kt b/payments-core/src/test/java/com/stripe/android/model/PaymentIntentFixtures.kt
index ecff18ad449..56140068284 100644
--- a/payments-core/src/test/java/com/stripe/android/model/PaymentIntentFixtures.kt
+++ b/payments-core/src/test/java/com/stripe/android/model/PaymentIntentFixtures.kt
@@ -142,7 +142,7 @@ internal object PaymentIntentFixtures {
             },
             "source": null
         }
-        """.trimIndent()
+            """.trimIndent()
         )
     }
 
@@ -249,7 +249,7 @@ internal object PaymentIntentFixtures {
             },
             "source": null
         }
-        """.trimIndent()
+            """.trimIndent()
         )
     }
 
diff --git a/payments-core/src/test/java/com/stripe/android/payments/PaymentIntentFlowResultProcessorTest.kt b/payments-core/src/test/java/com/stripe/android/payments/PaymentIntentFlowResultProcessorTest.kt
index 17923a6a371..c6d2db6905f 100644
--- a/payments-core/src/test/java/com/stripe/android/payments/PaymentIntentFlowResultProcessorTest.kt
+++ b/payments-core/src/test/java/com/stripe/android/payments/PaymentIntentFlowResultProcessorTest.kt
@@ -9,6 +9,7 @@ import com.stripe.android.core.Logger
 import com.stripe.android.core.exception.MaxRetryReachedException
 import com.stripe.android.core.networking.ApiRequest
 import com.stripe.android.model.PaymentIntentFixtures
+import com.stripe.android.model.StripeIntent
 import com.stripe.android.networking.StripeRepository
 import kotlinx.coroutines.ExperimentalCoroutinesApi
 import kotlinx.coroutines.test.UnconfinedTestDispatcher
@@ -37,7 +38,7 @@ internal class PaymentIntentFlowResultProcessorTest {
         { ApiKeyFixtures.FAKE_PUBLISHABLE_KEY },
         mockStripeRepository,
         Logger.noop(),
-        testDispatcher,
+        testDispatcher
     )
 
     @Test
@@ -232,7 +233,7 @@ internal class PaymentIntentFlowResultProcessorTest {
             val result = processor.processResult(
                 PaymentFlowResult.Unvalidated(
                     clientSecret = clientSecret,
-                    flowOutcome = StripeIntentResult.Outcome.CANCELED,
+                    flowOutcome = StripeIntentResult.Outcome.CANCELED
                 )
             )
 
@@ -260,6 +261,54 @@ internal class PaymentIntentFlowResultProcessorTest {
                 )
         }
 
+    @Test
+    fun `3ds2 canceled with requires capture intent should succeed`() =
+        runTest {
+            val refreshedPaymentIntent = PaymentIntentFixtures.PI_VISA_3DS2_SUCCEEDED.copy(
+                status = StripeIntent.Status.RequiresCapture
+            )
+
+            whenever(mockStripeRepository.retrievePaymentIntent(any(), any(), any())).thenReturn(
+                PaymentIntentFixtures.PI_PROCESSING_VISA_3DS2
+            )
+            whenever(mockStripeRepository.refreshPaymentIntent(any(), any())).thenReturn(
+                refreshedPaymentIntent
+            )
+
+            val clientSecret = "pi_3L8WOsLu5o3P18Zp191FpRSy_secret_5JIwIT1ooCwRm28AwreUAc6N4"
+            val requestOptions = ApiRequest.Options(apiKey = ApiKeyFixtures.FAKE_PUBLISHABLE_KEY)
+
+            val result = processor.processResult(
+                PaymentFlowResult.Unvalidated(
+                    clientSecret = clientSecret,
+                    flowOutcome = StripeIntentResult.Outcome.CANCELED
+                )
+            )
+
+            verify(mockStripeRepository).retrievePaymentIntent(
+                eq(clientSecret),
+                eq(requestOptions),
+                eq(PaymentFlowResultProcessor.EXPAND_PAYMENT_METHOD)
+            )
+
+            verify(
+                mockStripeRepository,
+                times(1)
+            ).refreshPaymentIntent(
+                eq(clientSecret),
+                eq(requestOptions)
+            )
+
+            assertThat(result)
+                .isEqualTo(
+                    PaymentIntentResult(
+                        refreshedPaymentIntent,
+                        StripeIntentResult.Outcome.SUCCEEDED,
+                        null
+                    )
+                )
+        }
+
     @Test
     fun `3ds2 canceled with succeeded intent should succeed`() =
         runTest {
@@ -273,7 +322,7 @@ internal class PaymentIntentFlowResultProcessorTest {
             val result = processor.processResult(
                 PaymentFlowResult.Unvalidated(
                     clientSecret = clientSecret,
-                    flowOutcome = StripeIntentResult.Outcome.CANCELED,
+                    flowOutcome = StripeIntentResult.Outcome.CANCELED
                 )
             )
 
@@ -318,7 +367,7 @@ internal class PaymentIntentFlowResultProcessorTest {
                 processor.processResult(
                     PaymentFlowResult.Unvalidated(
                         clientSecret = clientSecret,
-                        flowOutcome = StripeIntentResult.Outcome.CANCELED,
+                        flowOutcome = StripeIntentResult.Outcome.CANCELED
                     )
                 )
             }
diff --git a/payments-core/src/test/java/com/stripe/android/payments/SetupIntentFlowResultProcessorTest.kt b/payments-core/src/test/java/com/stripe/android/payments/SetupIntentFlowResultProcessorTest.kt
index 9e4d41ca546..1d90a8cf715 100644
--- a/payments-core/src/test/java/com/stripe/android/payments/SetupIntentFlowResultProcessorTest.kt
+++ b/payments-core/src/test/java/com/stripe/android/payments/SetupIntentFlowResultProcessorTest.kt
@@ -80,7 +80,7 @@ internal class SetupIntentFlowResultProcessorTest {
             val result = processor.processResult(
                 PaymentFlowResult.Unvalidated(
                     clientSecret = clientSecret,
-                    flowOutcome = StripeIntentResult.Outcome.CANCELED,
+                    flowOutcome = StripeIntentResult.Outcome.CANCELED
                 )
             )
 
@@ -122,7 +122,7 @@ internal class SetupIntentFlowResultProcessorTest {
             val result = processor.processResult(
                 PaymentFlowResult.Unvalidated(
                     clientSecret = clientSecret,
-                    flowOutcome = StripeIntentResult.Outcome.CANCELED,
+                    flowOutcome = StripeIntentResult.Outcome.CANCELED
                 )
             )
 
@@ -165,7 +165,7 @@ internal class SetupIntentFlowResultProcessorTest {
                 processor.processResult(
                     PaymentFlowResult.Unvalidated(
                         clientSecret = clientSecret,
-                        flowOutcome = StripeIntentResult.Outcome.CANCELED,
+                        flowOutcome = StripeIntentResult.Outcome.CANCELED
                     )
                 )
             }