Accuity Study Reveals Failed Payments Cost the Global Economy $118.5 Billion in 2020

Accuity Study Reveals Failed Payments Cost the Global Economy
  • 60% of organizations reported losing customers as a result of failed payments
  • Fewer than 50% are actively trying to improve their payments process despite nearly all respondents citing disappointment with failure rates
  • Over one third of payment data elements are still validated manually and two thirds of organizations identified reducing manual processes as extremely challenging

 

The cost of failed payments is estimated to have cost the global economy $118.5 billion in fees, labor and lost business in 2020 according to the latest study from Accuity, a LexisNexis® Risk Solutions company.

The total cost of failed payments regionally was $41.1 billion in EMEA, $33.7 billion in the Americas and $43.7 billion in Asia-Pacific (APAC). The report shows that the average cost of failed payments varied across the globe, depending on the type of organization. Banks spent on average approximately $360,000 in 2020 on failed payments – which includes all fees, labor and costs related to customer attrition – whereas the average corporate firm spent just over $200,000.

A failed payment is a payment that is rejected by a beneficiary bank or an intermediary bank in the payment flow. Payments can fail for several reasons including inaccurate or incomplete information, data entry issues due to human error or poor reference data and validation tools.

Key themes that emerged from the findings include:

Customer experience matters: 80% of organizations with over 20,000 failed payments per day reported having lost customers as a result. Failed payments have the biggest impact on customer service, with 37% of organizations reporting a severe impact and nearly 50% indicating some impact.

There is a tipping point: Although fewer than 50% of respondents stated they were actively trying to reduce the number of failed payments, the study found that a failed payments rate of 5% or above was the tipping point that compelled 80% of organizations to act.

Validation processes make a difference: Account number issues were the cause of one third of failed payments and inaccurate beneficiary details were the result of another third. The survey also showed that 66% of organizations found reducing manual processes extremely challenging. Manual processes introduce human error and slow down the payment process, making it less efficient.

Dalbir Sahota, global head of KYC and payments product management at Accuity said: “From our research, we found that while organizations are well aware there is a cost to failed payments, most do not fully understand the impact both financially and from a customer retention standpoint.

Tangible costs such as fees and labor might be easier to measure, but the intangible – including customer relationships – can be more difficult to repair. The payments market is fiercely competitive, so it is vital for organizations to take greater measures to improve their payments data to reduce their failed payment rate.”

About The True Cost of Failed Payments Report

The report is based on a survey conducted in early 2021 which generated responses from more than 200 payments professionals across the banking, financial, fintech and corporate sectors. It provides an overview of the payments landscape, explores the key themes that emerged from the survey and provides insight into the various elements that had an impact on failed payments throughout 2020.

Participants represent organizations of all sizes and geographies in both advanced and emerging economies, with the greatest number of responses from Europe (41%) and North America (31%) followed by APAC (16%), the Middle East and Africa (8%) and Latin America (4%).

Download the full True Cost of Failed Payments report to learn more.

Shopping Cart

Media Kit

    Data Protection

    The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

    The Digital Banker Summit

    Moving on from FTX: is 2023 the year of CBDCs?

    Indonesia, Jakarta

    Thailand, Bangkok

    Philippines, Manila

    Contact Us

      Data Protection

      The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

      Request Nomination Pack

        Data Protection

        The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

        Registration Form

          Data Protection

          The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

          Registration Form

            Data Protection

            The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

            Registration Form

              Data Protection

              The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

              Registration Form

                Data Protection

                The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

                Registration Form

                  Data Protection

                  The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

                  The world’s preeminent Private Banks and Wealth Managers are demonstrating a committed drive in innovation, advisory, new products and services to meet the sophisticated needs of their clients.

                  COVID-19
                  Amid economic activity revival on the back of the Covid-19 vaccine program, organisations moving from business continuity plans to stable working environments, together with the slightest improvement in unemployment numbers, forced the world to adjust to new realities. Coming to terms with the “new normal”, global investors are now on the look-out for attractive and stable investment opportunities.

                  Needs of Private Wealth customers and families worldwide have drastically changed due to the pandemic and banks have had to accelerate efforts to deploy a multi-channel service strategy and safeguard clients’ businesses and wealth against negative impacts of economic uncertainly.

                  The Global Private Banking Innovation Awards will recognise the world’s best private banks, wealth managers and asset managers that are championing innovation across advisory, service, products, customer experience and more.

                  Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. 

                  Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

                  Request Nomination Pack

                  Error: Contact form not found.