diff --git a/backend/src/services/payment-monitor.service.ts b/backend/src/services/payment-monitor.service.ts
index 999e081..a31e854 100644
--- a/backend/src/services/payment-monitor.service.ts
+++ b/backend/src/services/payment-monitor.service.ts
@@ -3,10 +3,12 @@ import invoiceService from './invoice.service';
 import { SELLER_PUBLIC_KEY } from '../config/stellar';
 import { pool } from '../config/database';
 import { checkInvoiceIsPayable } from './payment-verification';
+import { monitorBackoffMs } from '../utils/monitor-retry-backoff';
 
 class PaymentMonitorService {
   private closeHandler: (() => void) | null = null;
   private isRunning: boolean = false;
+  private failureCount: number = 0;
 
   /**
    * Start monitoring payments for the seller account
@@ -31,6 +33,7 @@ class PaymentMonitorService {
     this.startExpirationCheck();
 
     console.log('✅ Payment monitor started successfully');
+    this.failureCount = 0;
   }
 
   /**
@@ -167,15 +170,17 @@ class PaymentMonitorService {
    */
   private handleError(error: Error) {
     console.error('❌ Payment stream error:', error);
+    this.failureCount += 1;
+    const delayMs = monitorBackoffMs(this.failureCount);
     
-    // Attempt to restart after delay
+    // Attempt to restart after capped exponential backoff
     setTimeout(() => {
       if (this.isRunning) {
         console.log('🔄 Attempting to restart payment stream...');
         this.stop();
         this.start();
       }
-    }, 5000);
+    }, delayMs);
   }
 
   /**
diff --git a/backend/src/utils/monitor-retry-backoff.ts b/backend/src/utils/monitor-retry-backoff.ts
new file mode 100644
index 0000000..0bc5397
--- /dev/null
+++ b/backend/src/utils/monitor-retry-backoff.ts
@@ -0,0 +1,17 @@
+/**
+ * Capped exponential backoff for the payment monitor retry loop.
+ *
+ * Returns the number of milliseconds to wait before the next reconnect attempt,
+ * starting at 1 second and doubling each failure up to a 30-second cap.
+ */
+export function monitorBackoffMs(failureCount: number): number {
+  if (!Number.isFinite(failureCount) || failureCount < 0) {
+    return 1000;
+  }
+
+  const baseMs = 1000;
+  const capMs = 30000;
+  const delay = baseMs * 2 ** failureCount;
+
+  return Math.min(delay, capMs);
+}
diff --git a/backend/tests/fixtures/monitor-retry-backoff.fixture.ts b/backend/tests/fixtures/monitor-retry-backoff.fixture.ts
new file mode 100644
index 0000000..988a48b
--- /dev/null
+++ b/backend/tests/fixtures/monitor-retry-backoff.fixture.ts
@@ -0,0 +1,19 @@
+/**
+ * Fixture data for monitor retry backoff tests.
+ */
+
+export const BACKOFF_CASES = [
+  { failureCount: 0, expected: 1000 },
+  { failureCount: 1, expected: 2000 },
+  { failureCount: 2, expected: 4000 },
+  { failureCount: 3, expected: 8000 },
+  { failureCount: 4, expected: 16000 },
+  { failureCount: 5, expected: 30000 },
+  { failureCount: 10, expected: 30000 },
+];
+
+export const INVALID_COUNTS = [
+  { failureCount: -1, expected: 1000 },
+  { failureCount: Number.NaN, expected: 1000 },
+  { failureCount: Number.POSITIVE_INFINITY, expected: 1000 },
+];
diff --git a/backend/tests/monitor-retry-backoff.test.ts b/backend/tests/monitor-retry-backoff.test.ts
new file mode 100644
index 0000000..d4cecf8
--- /dev/null
+++ b/backend/tests/monitor-retry-backoff.test.ts
@@ -0,0 +1,19 @@
+import test from 'node:test';
+import assert from 'node:assert/strict';
+import { monitorBackoffMs } from '../src/utils/monitor-retry-backoff';
+import {
+  BACKOFF_CASES,
+  INVALID_COUNTS,
+} from './fixtures/monitor-retry-backoff.fixture';
+
+for (const { failureCount, expected } of BACKOFF_CASES) {
+  test(`monitorBackoffMs(${failureCount}) returns ${expected}ms`, () => {
+    assert.equal(monitorBackoffMs(failureCount), expected);
+  });
+}
+
+for (const { failureCount, expected } of INVALID_COUNTS) {
+  test(`monitorBackoffMs(${String(failureCount)}) falls back to ${expected}ms`, () => {
+    assert.equal(monitorBackoffMs(failureCount), expected);
+  });
+}