Amid the fierce competition among payment providers, failed payments have cost $118.5 billion in fees internationally and $33.7 billion in the Americas in 2020, according to a new report from Accuity, a LexisNexis subsidiary. In the Americas, nearly two-thirds (63%) of costs of failed payments stemmed from payment fees, followed by labor (27%) and attrition (10%).
More than two-thirds of payment processors said accuracy was most important to them, followed by speed (27%) and costs (5%), per the July 14 report.
Respondents said top challenges they face during payment processing are reducing manual processes (49%), regulations (47%), balancing accuracy with speed (35%) and getting responses from banks regarding settlement instructions (29%), the report found.
At a time when consumers seek a frictionless payment experience, Accuity’s report suggests that failed payments cost customers’ satisfaction. Per the report, 48% of respondents said failed payments had some impact on customer service and experience, followed by 37% reported a severe impact and 15% who said it had no impact at all.
Besides affecting customer experience, respondents also noted that failed payments disrupted their employees’ workflow and even caused customer losses. Nearly 60% of respondents reported some (35%), or severe (24%) impact on their ability to keep customers. Out of the organizations that reported more than 20,000 failed payments per day, 80% reported that they lost customers as a result. Plus, more than half (55%) of organizations said failed or broken payments had some impact on their staffers’ workload and less than a third (30%) had a severe impact.
Accuity's research offers some insight into why customers may abandon financial services firms, echoing a broader trend of consumers' dissatisfaction with payment providers. According to a December 2020 Accenture report, consumers' trust in online payments platforms to look after their financial well-being declined from 23% in 2018 to 17% in 2020.
Payment errors have been a pain for banks and customers alike. Consider the incident in August 2020 in which a Bank of America customer in Massachusetts discovered $2.45 billion in his account. Thankfully, the customer reported the error.