diff --git a/src/collections/payments.ts b/src/collections/payments.ts
index 797e140..64cea80 100644
--- a/src/collections/payments.ts
+++ b/src/collections/payments.ts
@@ -1,7 +1,7 @@
 import type { AccessArgs, CollectionBeforeChangeHook, CollectionConfig, CollectionSlug, Field } from 'payload'
 import type { BillingPluginConfig} from '@/plugin/config';
 import { defaults } from '@/plugin/config'
-import { extractSlug } from '@/plugin/utils'
+import { extractSlug, toPayloadId } from '@/plugin/utils'
 import { Payment } from '@/plugin/types/payments'
 import { initProviderPayment } from '@/collections/hooks'
 
@@ -156,13 +156,29 @@ export function createPaymentsCollection(pluginConfig: BillingPluginConfig): Col
 
             await initProviderPayment(req.payload, data)
           } else if (operation === 'update') {
-            // Auto-increment version for updates (if not already set by optimistic locking)
-            if (!data.version) {
-              const currentDoc = await req.payload.findByID({
-                collection: extractSlug(pluginConfig.collections?.payments || defaults.paymentsCollection),
-                id: req.id as any
-              })
-              data.version = (currentDoc.version || 1) + 1
+            // Handle version incrementing for manual updates
+            // Webhook updates from providers should already set the version via optimistic locking
+            if (!data.version && req.id) {
+              // Check if this is a webhook update by looking for webhook-specific fields
+              const isWebhookUpdate = data.providerData &&
+                (data.providerData.webhookProcessedAt ||
+                 (typeof data.providerData === 'object' && 'webhookProcessedAt' in data.providerData))
+
+              if (!isWebhookUpdate) {
+                // This is a manual admin update, safely increment version
+                try {
+                  const currentDoc = await req.payload.findByID({
+                    collection: extractSlug(pluginConfig.collections?.payments || defaults.paymentsCollection),
+                    id: toPayloadId(req.id)
+                  })
+                  data.version = (currentDoc?.version || 1) + 1
+                } catch (error) {
+                  // If we can't find the current document, start with version 1
+                  console.warn(`[Payment Hook] Could not fetch current version for payment ${req.id}, defaulting to version 1:`, error)
+                  data.version = 1
+                }
+              }
+              // If it's a webhook update without a version, let it proceed (optimistic locking already handled it)
             }
           }
         },
diff --git a/src/plugin/utils.ts b/src/plugin/utils.ts
index 9ebdd01..9ac3710 100644
--- a/src/plugin/utils.ts
+++ b/src/plugin/utils.ts
@@ -1,6 +1,15 @@
 import type { CollectionConfig, CollectionSlug, Field } from 'payload'
+import type { Id } from '@/plugin/types'
 
 export type FieldsOverride = (args: { defaultFields: Field[] }) => Field[]
 
 export const extractSlug =
   (arg: string | Partial<CollectionConfig>) => (typeof arg === 'string' ? arg : arg.slug!) as CollectionSlug
+
+/**
+ * Safely cast ID types for PayloadCMS operations
+ * This utility provides a typed way to handle the mismatch between our Id type and PayloadCMS expectations
+ */
+export function toPayloadId(id: Id): any {
+  return id as any
+}
diff --git a/src/providers/utils.ts b/src/providers/utils.ts
index 1837504..24db926 100644
--- a/src/providers/utils.ts
+++ b/src/providers/utils.ts
@@ -1,8 +1,9 @@
 import type { Payload } from 'payload'
 import type { Payment } from '@/plugin/types/payments'
 import type { BillingPluginConfig } from '@/plugin/config'
+import type { ProviderData } from './types'
 import { defaults } from '@/plugin/config'
-import { extractSlug } from '@/plugin/utils'
+import { extractSlug, toPayloadId } from '@/plugin/utils'
 
 /**
  * Common webhook response utilities
@@ -57,7 +58,7 @@ export async function updatePaymentStatus(
   // Get current payment to check version for atomic locking
   const currentPayment = await payload.findByID({
     collection: paymentsCollection,
-    id: paymentId as any // Cast to avoid type mismatch between Id and PayloadCMS types
+    id: toPayloadId(paymentId)
   }) as Payment
 
   const now = new Date().toISOString()
@@ -68,7 +69,7 @@ export async function updatePaymentStatus(
     const result = await payload.updateMany({
       collection: paymentsCollection,
       where: {
-        id: { equals: paymentId as any }, // Cast to avoid type mismatch
+        id: { equals: toPayloadId(paymentId) },
         version: { equals: currentPayment.version || 1 }
       },
       data: {
@@ -112,7 +113,7 @@ export async function updateInvoiceOnPaymentSuccess(
 
   await payload.update({
     collection: invoicesCollection,
-    id: invoiceId as any, // Cast to avoid type mismatch between Id and PayloadCMS types
+    id: toPayloadId(invoiceId),
     data: {
       status: 'paid',
       payment: payment.id