Failed Payments Cost Financial Institutions Billions, New Research Finds

10/07/2026

ATLANTA — Three-quarters of financial institutions lose up to $5 million a year in customer revenue due to failed payments, according to the latest True Impact of Failed Payments 2026 study from LexisNexis Risk Solutions. 

The study also found that 37% of financial institutions (FIs) incur costs of more than $20 per failed or delayed payment, but fail to fully recover those losses through fees, collecting typically between $11 and $15 for each failed transaction.  

In addition to the financial losses, failed payments damage customer relationships and create unnecessary operational work, according to the study of 150 payments executives at financial institutions across North America, Europe, the Middle East and APAC.   

The 2026 study finds that many payment failures are caused by basic data issues, such as incorrect beneficiary information, which accounts for 21% of failures, while account number issues and incorrect bank details are each the cause of around 15% of failures. 

“Failed payments are a key efficiency focus for financial institutions that aim to drive straight-through processing and further introduce ISO20022 payment message structures within their systems,” said Vijay Nagarajan, director of market planning, payments efficiency at LexisNexis Risk Solutions. “They cause financial loss, customer friction and operational re-work. The silver-lining is that many are preventable. Better data, validation and screening can help identify issues earlier during payment initiation and enable straight-through and frictionless cross-border payments.” 

Opportunity to improve STP rates 

The research highlights considerable room for improvement in straight-through processing (STP), a key measure of payment efficiency, particularly for cross-border transactions. 

Only 2% of FIs report achieving near-100% STP for cross-border payments, while just 9% achieve an STP rate above 95%. Four in five FIs are not satisfied with their current STP rates, and 1 in 10 cross-border payments fails on its first attempt. 

The impact quickly adds up. A typical FI in the study processes around 10,000 cross-border payments each day. At a 95% STP rate, 500 payments would still require intervention every day. At the $12.10 average cost, that could represent more than $6,000 a day, or approximately $2.2 million a year, in direct costs. The FI may also need a sizable operating team to correct such errors adding to the operating cost.  

The customer impact is also clearly felt: One-third of FIs report losing between 2% and 5% of customers through failed payments, while 90% say strong STP rates have a positive impact on customer retention. 

The research points to a straightforward opportunity. Better payment screening, validation and fulfilment tools can help improve data quality, reduce exceptions and increase STP rates. Among FIs that have implemented payment data validation solutions, two in five report improvements in STP of more than 25%. 

“Failed payments are often seen as an unavoidable consequence of cross-border payment complexity,” said Robin LoGiudice, Strategic Advisor, Datos Insights. “Our research shows that many failures are instead linked to identifiable issues with payment data, including beneficiary information, account numbers and bank details. Improving data quality and validation earlier in the payment journey gives financial institutions a clear opportunity to reduce failures, lower operational costs and improve the customer experience.” 

Regional differences 

Payment performance varies significantly by region. Europe demonstrates the strongest performance, with 92% of institutions reporting failure or delay rates below 5%, followed by APAC at 77% and North America at 69%. Meanwhile around two in five FIs in the Middle East, a quarter (26%) in Latin America and 19% in Africa report the same. 

“These differences reflect variations in regional and internal factors, such as variations in clearing systems, local regulations, specific payment data requirements and lack of regional market standardisation,” Nagarajan continued. “Fragmented banking infrastructure, correspondent banking, additional compliance requirements and inconsistent payment data can create further friction, particularly in less standardised markets.” 

He added, “As cross-border payment volumes grow, improving STP offers financial institutions a practical way to reduce avoidable costs, improve operational efficiency and deliver a better customer experience. The ISO20022 enabled dataset is one-step towards the aim of a fast, friction-less payment experience.”

About LexisNexis Risk Solutions
LexisNexis® Risk Solutions provides customers with information-based analytics and decision tools that combine public and industry-specific content with advanced technology and algorithms to assist them in evaluating and predicting risk and enhancing operational efficiency. Headquartered in metro Atlanta, Georgia, the company has offices throughout the world, serves customers in more than 190 countries and territories and is part of RELX. For more information, please visit LexisNexis Risk Solutions and RELX.