Financial institutions lose up to $50m a year from failed payments

1 in 3 incur costs of over $20 every time a cross-border payment fails or is delayed.

Financial institutions lose $5m to $50m annually due to lost customers stemming from failed payments, according to a survey by LexisNexis Risk Solutions (LNRS).

In a poll of 150 payment executives in financial institutions globally, 67% said that they lose revenue of up to $5m per annum—and 5% lose $50m or more through failed payments.

One in 3 or 37% of respondents incur costs of over $20 every time a cross-border payment fails or is delayed, LNRS found.

“The costs compound directly and indirectly. Each failed or repaired payment costs $12.10 on average, while investigation and repair consume staff time, lock up liquidity, and delay finality across the correspondent chain,” said John Hutton, senior director, head of payments efficiency at LNRS.

Meanwhile, 4 in 5 financial institutions expressed they are dissatisfied with their straight-through processing rates, and nearly half reported failure rates of 10% or more, Hutton said.

Leading financial institutions are approaching near 100% straight-through processing with a combination of using banking data and structured ISO 20022 messaging, and automated validation, Hutton said.