Failed payments could lead to £1m annual losses

Enterprise businesses could face losses of up to £1 million a year due to failed payments as small and medium size businesses also face significant failure rates, according to new research.

Analysis by recurring payments firm GoCardless of payment data from over 55,000 customers and 900 external businesses found that medium sized or mid-market businesses face losses of £200,000 a year due to failed payments, while small businesses stand to lose £6,000 on an annual basis.

A business with £250m in annual revenue, with a 2.1 per cent failure rate across all payment methods, will lose £5.25m each year in uncollected payments, pointing to the growing importance of successful payments infrastructure for a business’ bottom line.

The report also found that businesses that primarily collect payments with digital wallets have the highest average failure rate at 12 per cent, as the industry struggles to catch up with customer demand for cardless payments.

Furthermore, the data showed that payments collected by credit or debit cards have a failure rate of 8.2 per cent - 2.9 times more failures than a GoCardless merchant with greater failure rates being seen within business to customer (B2C) rather than business to business (B2B) operations.

A business that does not retry payments once they have failed can expect to see a failure rate of 3.5 per cent on average. However, when a business makes a maximum of one retry attempt per failed payment, it can expect to see a payment failure rate of 2.4 per cent.

Commenting on the findings, Duncan Barrigan, Chief Product Officer, GoCardless, said: “Payment failures are widely accepted as an inevitability. We don’t believe this should be the case. They can seriously hurt a business - they are costly and can damage reputation and customer relationships.”

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