France international Payet, West Ham's outstanding player last season, has refused to play recently in a bid to get a move back to his native country.
Collison, however, believes the East London team have turned a corner in a disappointing season marred by the club's move to the London Stadium.
“Last weekend’s result against Crystal Palace was a massive statement from West Ham,” Collison told Reuters.
“The whole situation surrounding Dimitri Payet seems to have really brought the squad together.
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“It’s galavanised the club and they’ve proved a point to the rest of the Premier League. They’re up to 12th place now and all of sudden they’re looking at closing in on the top half of the table.”
Collison, 28, believes the players are strong mentally.
“The core bunch has been there a long time – Andy Carroll, James Collins and Mark Noble etc. They’ll stick together and put it right,” he said.
West Ham travel to the North East on Saturday to play Middlesbrough who are still searching for their first league win of 2017.
“Middlesbrough is a tricky place to go but West Ham will see this an opportunity to get points on the board,” said Collison who made 121 appearances for West Ham.
“(Alvaro) Negredo is a classy striker and will no doubt be a threat. Boro have also done a great bit of business by bringing in Patrick Bamford this week. He’s probably looking to make up for a bit of lost time. Now he’s got the chance to make his mark on the Premier League.
“But I honestly think West Ham are going to win on Saturday. I feel like they turned a corner last weekend so I am going for a 2-1 victory."
LIMITED CHANCES
Middlesbrough winger Stewart Downing has had limited chances under Aitor Karanka this season, making just one start in the last 11 games.
But his former Hammers team mate Collison believes Downing will be key to Boro maintaining their Premier League status.
“I am very biased because I played with Stewart for a couple of seasons at West Ham. He is a fantastic pro and when you train with him day in and day out you realise just how good he really is," said Collison, now manager of the Peterborough Under 18 team.
“He’s an experienced Premier League player and Karanka is going to need him between now and the end of the season, especially if it is really tight at the bottom of the table.”
Collison was forced to retire at the age of 27 due to a series of knee injuries and he understands the fitness struggles endured by West Ham striker Andy Carroll.
“It’s so pleasing to see Andy doing well. Every time he gets a run of games he scores goals," he said.
“The tough thing for Andy is that he sometimes gets some unfair criticism. Not only have I experienced injuries and know how frustrating it can be, but I have also witnessed him working his socks off day and night on his fitness," said Collison.
“When Andy Caroll is fit and firing on all cylinders there are not many strikers in the Premier League who are better than him.”
(Editing by Ed Osmond)
