Payments friction has acquired a price tag.
For many finance leaders, delays caused by fraud controls, manual reviews and disconnected payments systems are not confined to mere operational headaches. They now represent measurable revenue loss, higher operating costs and weaker customer relationships.
The PYMNTS Intelligence report “When Controls Slow Commerce: The Data Behind Middle-Market Payment Friction,” a collaboration with Plaid, showed that payments controls designed to reduce fraud can also slow legitimate transactions when they depend on manual intervention or fragmented infrastructure.
The findings suggest that the challenge extends beyond payments operations. The report revealed that 55% of chief financial officers said fraud or security controls caused customer- or partner-facing payments delays at least occasionally during the past year, while only 43% rated their organization’s ability to process payments quickly while maintaining security controls as strong or very strong.
There’s a persistent execution gap between what firms want to achieve and what they can deliver, and it carries a financial consequence.
Across the survey, firms estimated that payments delays, errors and fraud cost an average of 79 basis points of annual revenue. The burden was concentrated among organizations where friction was a recurring problem. Those firms lost an estimated 192 basis points of annual revenue. Recurring-friction firms were also more likely to describe payments reliability as critical to customer retention.
Real-time payments have raised customer expectations for speed, yet they have also exposed the limits of manual approval processes. As payments volumes accelerate, firms are looking beyond procedural fixes and toward technology that allows security decisions to occur automatically within the payments flow.
Three Strategies That Address the Root Causes of Friction
Automate payments approvals
The most widely cited improvement among surveyed CFOs was reducing manual review. The report found that 85% said automation that minimizes manual approvals would improve both payments speed and security, rising to 89% among firms experiencing recurring payments friction.
Manual intervention introduces delays, increases labor costs and creates opportunities for inconsistent decisions. Automated workflows allow routine transactions to move without human involvement while reserving exceptions for review.
Embed fraud scoring into payments decisions
Artificial intelligence and machine learning are becoming practical tools for fraud prevention rather than stand-alone detection systems. Among recurring-friction firms, 78% identified AI- and machine learning-based real-time fraud scoring as a capability that would improve both payments speed and security.
Embedding fraud analysis directly into payments authorization enables firms to assess risk continuously instead of pausing legitimate payments for manual investigation. Real-time decisioning helps distinguish suspicious activity from ordinary customer behavior before payments delays become customer service problems.
Measure friction as a financial KPI
The research indicated that payments friction deserves attention alongside traditional financial measures because its effects reach beyond operations. Delays, failed payments and authentication problems translate into lost revenue, remediation costs and customer dissatisfaction.
Visibility gaps remain widespread. The report found that 78% of firms cited payments visibility and communication issues as contributors to customer friction, while the same share reported execution failures such as delayed or incorrect payments. Firms that quantify these failures can identify where revenue leakage occurs and determine whether investments in payments infrastructure are producing measurable returns.
End-to-end straight-through processing ranked among the most sought-after investments, cited by 89% of recurring-friction firms. AI-driven fraud scoring and real-time payments capabilities also ranked near the top because they reduce the need for manual intervention before payments reach customers.
Firms Can Decrease Delays While Preserving Security
The advantage extends beyond faster settlement. Organizations need integrated payments infrastructure, real-time visibility into payments status, reliable data, automated workflows and fraud controls that operate within the transaction itself rather than outside it. These capabilities allow firms to process legitimate payments without unnecessary interruption while preserving strong security standards.
Firms that treat payments friction as a financial metric that can be improved rather than an isolated operational issue are better positioned to protect revenue, strengthen customer confidence and support faster payments experiences as real-time commerce continues to expand.
At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.
