The Hidden Costs of Payment Declines (and What to Do About Them)

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Every business that accepts payments—whether for products, services or recurring bills—faces a common but often underestimated challenge: payment declines. These failures don’t just represent a missed transaction; they ripple through operations, customer relationships and bottom-line performance.

In 2023 alone, false declines put $157 billion at risk in the United States, with $81 billion ultimately lost due to failed transactions that could have been approved. Whether caused by insufficient funds, expired cards or fraud flags, these declines quietly erode cash flow, frustrate customers and strain internal resources.

The good news is that businesses can proactively address payment declines. Doing so will help protect revenue, improve customer satisfaction and streamline operations. Ready to learn more about how to prevent payment declines? Read on.

 

What causes payment declines?

In order to know how to combat payment declines, you first must know why they occur. Payment declines can stem from a variety of sources, some benign and others more serious. The following list includes many of the most common culprits.

  • Insufficient funds: A simple lack of money in the account at the time of transaction
  • Expired or stolen cards: Outdated payment credentials or compromised accounts
  • Fraud attempts and account freezes: Security measures that block legitimate transactions
  • High support burdens: ISVs often struggle to support merchants when payment issues arise, as they must coordinate across multiple providers. This leads to increased support requests and puts additional strain on ISV teams, making it challenging to deliver timely and effective assistance.
  • Manual entry errors: Typos in account numbers or billing details
  • Systemic gaps: Lack of recurring payment options, poor user interfaces or limited payment channels

Even with consumer-friendly features like registered checkout and self-service portals, payments still fail. And when they do, the consequences go beyond the transaction itself. Businesses may face delayed revenue, increased customer service demands and even service disruptions that damage brand loyalty.

According to recent research, 54% of consumers make late payments, often due to disorganized bill pay strategies or limited flexibility in how they can pay. These missed payments aren’t just inconvenient—they’re costly.

 

The ripple effect on businesses

Payment declines don’t just interrupt a transaction—they disrupt the entire business ecosystem. From cash flow to customer loyalty, the consequences are far-reaching and often underestimated.

For starters, when payments fail, revenue is delayed or even lost entirely. Businesses may be forced to suspend services, chase down updated account information or absorb the cost of missed transactions. These interruptions can snowball, especially for organizations that rely on recurring payments to maintain predictable income.

Delayed or missed payments are often the result of poor bill pay experiences, unclear due dates or limited payment options. The result? Service disruptions, frustrated customers and a hit to recurring revenue.

Failed payments, no matter what the reason, can quickly sour the customer experience and erode customer trust. Consumers expect bill payments to be as seamless as online shopping, but many businesses fall short. Limited flexibility, lack of self-service options and slow issue resolution leave customers feeling stuck.

And the cost of dissatisfaction is steep: 60% of consumers say they’ve switched brands after a negative contact center experience. When payment issues lead to service interruptions or poor support, businesses risk losing the transaction and, more importantly, the customer, for good.

Behind every failed payment is a team scrambling to fix it. Whether it’s manually reaching out to customers, reconciling data across systems or coordinating with third-party agencies, the effort required to resolve declines drains valuable resources. These lagging operational insights and fragmented data make it difficult for billers to respond quickly to payment issues. Without a centralized platform or real-time reporting, businesses struggle to manage the payment lifecycle efficiently.

Beyond financial and operational costs, payment declines can expose businesses to serious compliance and security risks, such as:

  • Hidden complexities. Each payment channel—whether online, mobile or in-person—comes with its own set of regulatory requirements. As political and industry landscapes shift, staying compliant becomes a moving target. Businesses that fail to adapt risk legal exposure, fines and reputational damage.
  • Cybersecurity threats. A single breach can cost millions—and the average cost of a data breach in 2024 reached $4.9 million. By adding a third party to your process—an external collections agency, for example, which requires securely transferring data to the agency’s infrastructure under its policies and processes—you introduce additional layers of cyber risk. This means you must be prepared to expand your scope of protections to safeguard your customers’ valuable data.

Businesses must adopt best-in-class security practices, including tokenization and secure data storage, to safeguard customer information and maintain trust.

The cost of recovery

When a payment fails, the recovery process can be (and usually is) costly, especially if it’s handled manually. Many businesses rely on call centers or third-party agencies to chase down failed payments. But this approach comes with a price: $2.50 per call on average, not to mention the time and effort spent by internal teams.

Adding automation changes the game. CSG Forte’s automated recovery solutions offer a smarter alternative to using valuable human hours making collections calls. With intelligent retry logic, businesses can:

  • Retry failed ACH transactions up to two more times (per Nacha rules).
  • Recover payments when funds become available—without manual intervention.
  • Avoid the need for costly third-party collection efforts.

The results speak for themselves:

  • CSG Forte offers a 60% average recovery rate (the industry average is between 20% and 30%).
  • One enterprise recovered $78 million in 2023 using CSG Forte’s recovery services.

By automating recovery, businesses:

  • Save money.
  • Preserve customer relationships.
  • Minimize costly collections calls.
  • Avoid service disruptions

 

Proactive solutions that minimize declines

Embedded payments unlock new revenue streams. ISVs can:
The best way to reduce the cost of payment declines is to prevent them from happening in the first place. CSG Forte offers a suite of proactive tools designed to improve transaction success rates and protect both businesses and customers.

Account Verification

Before a transaction even begins, automated verification can:

  • Confirm account ownership and accuracy
  • Ensure the account is active
  • Validate routing and account numbers
  • Flag high-risk accounts

This front-end protection helps businesses avoid declines due to outdated or incorrect information—and reduces fraud and collection activities.

Tokenization

Tokenization replaces sensitive payment data with secure placeholders, reducing exposure and accelerating checkout for recurring payments. It’s a win-win: customers feel safer, and businesses reduce the risk of data breaches.

Account Updater

Expired cards are a common cause of failed payments. With account updater services, businesses can automatically refresh card details to maintain authorization rates and avoid interruptions.

Recovery Services

When payments fail, automated recovery ensures businesses can retry ACH transactions without manual effort—boosting revenue and reducing friction.

Together, these tools form a comprehensive strategy to protect payments and preserve relationships—ensuring fewer declines, happier customers, and more consistent cash flow.

 

Protect the payment, preserve the relationship

Payment declines are more than a technical hiccup—they’re a silent threat to revenue, customer loyalty, and operational efficiency. From insufficient funds and expired cards to fraud flags and manual errors, the causes are varied—but the impact is consistent: lost revenue, strained teams, and frustrated customers.

The good news? These costs are avoidable, and the ones that aren’t avoidable are manageable. Businesses can take proactive steps to reduce decline rates, recover lost revenue, and improve the overall payment experience for customers. Here’s how:

  • Modernize your payment infrastructure: Outdated systems are often the root of failed transactions. CSG Forte’s BillPay platform offers plug-and-play modernization that integrates seamlessly with existing technology. These flexible payment options and channels mean you can meet customers where they are and let them pay how they prefer.
  • Stay compliant and agile: Regulatory requirements are constantly evolving. Choose vendors like CSG Forte that offer compliance-ready solutions across all payment channels, helping you stay ahead of legal changes and industry standards.
  • Use real-time reporting for smarter decision-making: Lagging insights can delay action. With centralized platforms like CSG Forte’s DEX, businesses gain real-time visibility into payment performance, enabling faster responses and better strategic decisions.

With proactive tools like account verification, tokenization, automated recovery and account updater services, businesses can dramatically reduce the frequency and fallout of failed payments. CSG Forte’s BillPay platform offers a modernized, omnichannel solution that not only streamlines transactions but also strengthens customer relationships and protects your bottom line.

In a world where consumers expect seamless, secure, and flexible payment experiences, businesses must rise to meet those expectations—or risk falling behind. By investing in smarter payment infrastructure, you’re not just preventing declines—you’re unlocking growth.

Are you ready to reduce payment declines and safeguard your revenue? Learn how CSG Forte’s modern payment solutions can help your business thrive with greater efficiency and reliability. Explore our full suite of payment services, or check out our customer success stories to see real-world results. Take the first step toward transforming your payments by contacting our team today so you can experience the difference for yourself!