Payment risk controls protect businesses and their customers from fraudulent, slow or erroneous transactions. Yet for many U.S. middle-market firms, these guardrails can delay payments, cause mistakes and let fraud slip through, frustrating the customers and partners they are meant to safeguard. The challenge for CFOs is building payment processes that deliver both speed and security without adding friction.
PYMNTS Intelligence’s latest Certainty Project research shows how difficult that balance can be. Most U.S. middle-market CFOs say their firms prioritize payment speed and security equally, but only 43% rate their actual ability to process payments quickly while maintaining strong fraud and payment risk controls as “strong” or “very strong.” The gap shows up directly in customer-facing operations: 55%of CFOs say payment risk or fraud controls caused payment delays that negatively impacted customers or partners at least occasionally over the past 12 months.
Payment friction carries significant financial and customer-retention costs.
The cost is meaningful. Firms experiencing recurring payment friction estimate that delays, errors and fraud cost them 192 basis points of annual revenue—more than six times the revenue loss reported by friction-light peers. These firms are also far more likely to say payment reliability is critical to customer retention, underscoring how the issue extends well beyond back-office efficiency. When payments are slow or non-transparent, customer trust can weaken along with revenue performance.
Amid this challenge, middle-market CFOs aren’t waiting around. Many firms have strengthened their customer support, added real-time payment notifications, and formalized payment-processing expectations. Still, firms experiencing recurring friction widely expect conditions to worsen. That is why payment modernization has become as much a capability question as a priority for improving customer experience. CFOs are looking beyond surface-level fixes to infrastructure upgrades such as end-to-end straight-through processing and real-time fraud scoring through artificial intelligence and machine learning (AI/ML)—tools designed to reduce friction while keeping payments secure.
These are just some of the findings detailed in “When Controls Slow Commerce: The Data Behind Middle-Market Payment Friction,” a collaboration with Plaid. This edition examines the friction introduced by fraud and payment risk controls and how it impacts the customer experience. It draws on insights from a survey of 60 CFOs at U.S.-based middle-market companies with annual revenues between $100 million and $1 billion. The study was conducted April 9-21, 2026.
The Friction Reality
Payment friction from fraud and risk controls is widely recognized as a bottom-line issue.
Payment friction, as used in this report, refers to delays or disruptions in payment processing caused by a company’s fraud detection, security controls, and authentication requirements that negatively affect customers or partners.
It’s pervasive because every business makes bank-to-bank payments and faces the same challenge. If you vet customers cursorily, some payments become erroneous or fraud slips through. But if you drag out the verification process before letting someone pay, customers grow annoyed and can drop off.
These two undesirable outcomes materialize in multiple ways.
- Execution failures include payment delays and transaction errors or failures.
- Trust and payment risk failures revolve around disputes or chargebacks that were not resolved in a timely manner, and security breaches or fraud incidents involving customer data or funds.
- Visibility and communication gaps center on a lack of real-time visibility into payment status and unclear or inconsistent communication about fees, timelines or payment policies.
- Channel and authentication gaps include the inability to offer customers their preferred payment methods, inconsistent payment experiences across channels, and complex authentication or checkout processes.
For most middle-market firms, these failures rarely occur in isolation. A delayed payment, for example, often triggers a communication gap, which can escalate into a trust problem, compounding the original disruption.
The speed vs. security puzzle
Speed without security is weak, and security without speed is a business killer. For middle-market firms, the goal when navigating both is to strike a balance. About six in 10 (58%) middle-market CFOs say their organizations prioritize both goals equally, while less than one in four say their firms lean toward speed (18%) or security (23%). Only a few companies strongly prioritize one or the other.
Smaller firms with annual revenues between $100 million and $400 million are considerably more likely to look for a balance between the two objectives, at 66%, than those with $400 million to $1 billion in revenue, at 48%.
But the larger a company gets, the more security takes priority over speed. More than one-third (36%) of firms in the $400 million to $1 billion annual revenue group put security first, suggesting that organizations grow more cautious as their scale and complexity increase.
That makes sense, given that as transaction values and vendor counts increase at larger firms, their attack surface—meaning the opportunities for fraudsters—also expands, especially in bulk payout processing environments. Furthermore, when companies pay thousands of vendors at once, errors and duplicate invoices can flow alongside legitimate payments. Meanwhile, the pressure to pay on time can make finance teams and systems less likely to pause and check. Either way, the more automated and the faster the payment flow, the shorter the window to catch something erroneous before money moves.
How operational uncertainty and payment friction go together
The firms with the most payment friction don’t efficiently run fraud and security controls for payment processes without slowing down or disrupting the transfer of funds. They’re operating amid the greatest business uncertainty and absorbing the most revenue loss due to payment-related delays, errors, fraud, and internal efforts to resolve them.
PYMNTS Intelligence defines “uncertainty” as corporate executives’ self-reported assessments of how unpredictable or unreliable financial, regulatory, market and operational conditions feel across their core operations and finances. These areas include accounts payable and receivable, cash and liquidity positions, macroeconomic conditions, consumer and customer demand, risk management, compliance and regulatory issues, supply chains, payments capabilities, exchange rates and competitive positions.
Firms operating under high levels of uncertainty tend to experience recurring payment friction and collectively absorb a disproportionate share of the survey sample’s revenue losses. Specifically, these firms have four times the level of annual revenue loss (1.62% of total revenue) as firms experiencing low uncertainty (0.40% of annual revenue).
Striking a balance
How well firms execute on their balancing agenda is a nuanced matter. Just 43% of all firms rate their ability to process payments quickly while simultaneously maintaining strong fraud and security controls as “strong” or “very strong.” Most other firms (48%) rate themselves as having only a “moderate” ability to balance everything, suggesting that trade-offs between speed and security surface regularly in their day-to-day operations.
But those averages conceal a meaningful distinction. When the ability to balance speed and security is viewed through the lens of business environment predictability, firms with a less secure outlook fare far worse. Nearly six in 10 (59%) firms operating under low uncertainty reach the “strong” or “very strong” threshold. By contrast, that figure plunges to 26% for those operating under high uncertainty.
Most striking is that close to two-thirds of high-uncertainty firms rate themselves only moderate, suggesting that business stress and payment capability reinforce each other.
Slower payments are an expensive consequence of friction due to payment risk controls that don’t work smoothly or quickly. Fifty-five percent of CFOs report that security or fraud controls caused delays that negatively impacted customers or partners at least occasionally over the past 12 months.
What’s more, the frequency of delays tracks closely with a firm’s level of operational uncertainty. High-uncertainty firms (25%) are five times as likely to experience recurring friction in this area as low-uncertainty firms (4%). Larger firms in the $400 million to $1 billion revenue range are somewhat more insulated, with 52% reporting no meaningful friction, compared with 40% among smaller firms, a pattern that mirrors the capability scores.
The degrees of friction
The data reveals that the better a U.S. middle-market firm is at maintaining transaction security while processing payments quickly, the less likely it is to experience heavy friction from fraud and security controls.
CFOs were asked how often their payment risk or fraud controls caused payment delays that negatively affected their customers or business partners.
Three groups emerged. We call the 27 surveyed CFOs who reported that their controls “rarely” or “never” caused delays “friction-light.” The 24 CFOs whose controls “occasionally” cause delays are labeled “occasional friction.” The nine CFOs whose controls cause delays “frequently” or “very frequently” are in the “recurring friction” group.
Companies that rarely experience payment delays rate their own payment-handling capabilities nearly twice as highly as those that frequently experience delays. Specifically, on a scale of 0 to 100, companies that rarely experience payment delays rate their own payment-handling abilities at 71, versus 42 among those that experience them frequently.
What’s more, that 30-point gap is three times wider than the one between companies operating in stable versus uncertain business environments. This may suggest that how often a company experiences payment delays is a stronger driver of payment capability than the broader economic pressures it faces.
Zooming out, these findings show that friction usually occurs when there is a structural gap in a firm’s anti-fraud or security technological capabilities. When companies feel confident about the solutions they have in place, friction is rarely a serious issue.
Counting the Cost
Friction translates into measurable hits to the bottom line.
Friction around the payment process comes in many forms. Two categories of customer-facing issues affect most U.S. middle-market firms. Roughly eight in 10 (78%) CFOs said that visibility and communication gaps around processes like fees and payment policies increased customer friction in the last 12 months. The same share named execution failures, such as incorrect or delayed payments. These trends are similar for friction-light and recurring friction firms, indicating that middle-market firms typically struggle in both areas.
Channel and authentication issues, however, appear to worsen for firms reporting higher overall levels of friction. While 78% of companies in the recurring friction category say these problems added to customer friction in the last 12 months, only 41% of friction-light firms say the same. The drivers are operational. Recurring-friction firms are far more likely to report inconsistent payment experience across channels (56% versus 26% among friction-light firms) and complex or burdensome authentication processes (33% versus 7%).
Payment reliability plays a critical role in customer retention.
When CFOs at recurring-friction firms assess the impact of payment reliability on customer retention, their views are dramatically different from those of their friction-light counterparts. Close to half (44%) of recurring-friction CFOs rate payment reliability as critical to retention, and 88% say it is at least moderate. At friction-light firms, only a few respondents (4%) say the link is critical, and 26% it is minor or nonexistent. These findings point to a virtuous cycle for firms that get payment risk controls right—when friction is low, customer retention improves, which boosts revenue and encourages further investment into a smooth payment experience.
Meanwhile, the inverse is equally true: Firms caught in a high-friction cycle face rising remediation costs and eroding customer confidence.
The financial cost of payment friction is significant. Across the full survey sample, CFOs estimated their firms lost 79 basis points of annual revenue in the past 12 months to payment-related delays and errors, plus the costs of managing these issues. At first glance, this number may seem small—but as a share of total revenue, it indicates a significant impact on the bottom line.
Slicing these results by friction tier underscores the importance of managing payment friction effectively. For recurring-friction firms, the bill nearly triples to 192 basis points, or roughly 2% of gross revenue. That is more than six times the rate for friction-light companies, which incur costs equal to 31 basis points of revenue.
At the same time, a firm’s level of operational uncertainty continues to have a significant impact. Firms operating under high uncertainty absorb four times the revenue loss of low-uncertainty peers (163 versus 40 basis points).
Capability Solutions
Firms are investing in measures to strengthen customer trust.
Most middle-market firms are working to strengthen customer trust in the transaction process. The most common step taken over the past 12 months has been to improve customer support training, with 55% of companies taking this step. Roughly half of firms have also added or enhanced real-time payment notifications (48%), and 43% have established or published formal service-level expectations for payment processing. One in five has launched or augmented customer-facing dashboards.
Recurring-friction firms have been more active than others in three of the four areas. Two-thirds (67%) have established formal service-level terms, and the same share have augmented their customer support training. Another 56% added or upgraded real-time payment notifications.
The high level of activity in these areas suggests recurring-friction firms are realizing the cost and negative impact of payment friction and working to address it. That said, comparatively few (11%) are investing in real-time customer dashboards, a more robust solution that can prevent many payment-related problems before customers ever reach the checkout. Among friction-light companies, this increases by about 2.4 times, to 26%, reflecting a more proactive approach to combating payment friction.
Despite these efforts, most recurring-friction firms expect conditions to worsen.
The sobering news is that despite their efforts to improve customer trust by improving key areas of the transaction process, most recurring-friction firms expect their situation to worsen, at least in the near term.
More than half (55%) anticipate more friction over the next 12 months, while 99% of friction-light firms expect it to decrease or stay the same. That translates to a “net optimism gap” of 97 points between the two tiers. What this boils down to is that the actions most commonly taken in response to payment friction appear insufficient without the right anti-fraud and security infrastructure as a foundation.
CFOs see automation and fraud controls as the path forward.
The good news is that CFOs broadly agree on what would improve both payment speed and security simultaneously. Automation to reduce manual review tops the list, cited by 85% of respondents. Most CFOs also cite end-to-end, straight-through processing (70%) and artificial intelligence or machine learning (AI/ML) for real-time fraud scoring (53%). Meanwhile, comparatively few (28%) name real-time payment rails as a solution, suggesting that middle-market companies generally feel less than comfortable with real-time payments when it comes to maximizing security.
Interestingly, recurring-friction firms were much more likely than average to cite end-to-end, straight-through processing, AI/ML real-time fraud scoring and real-time payment rails. This points to strong recognition among companies struggling with payment friction of the importance of upgrading their fraud and payment risk control processes. CFOs who invest in robust infrastructure—automation, real-time fraud scoring and straight-through processing—will turn the payments process from bumpy to smooth.
Security Shouldn’t Feel Like a Speed Bump
By Brian Dammeir, Head of Payments, Plaid
There’s a tension baked into every payment that middle-market finance leaders know well: Move too fast, and you invite fraud; move too cautiously, and you frustrate the customers you’re trying to serve. What this research reveals is that most firms haven’t resolved that tension; they’ve just learned to live with it.
That’s no longer good enough. Firms experiencing recurring payment friction are absorbing nearly 2% of gross revenue in delays, errors and related costs. That’s not a rounding error. For a $500 million business, it’s millions of dollars walking out the door every year, and most of it is preventable.
What we hear consistently from Plaid’s customers is that friction usually isn’t a security problem. It’s an infrastructure problem. When verification tools aren’t integrated into the payment workflow, every transaction becomes a judgment call—and judgment calls slow everything down. Manual reviews pile up, exceptions multiply and the customer on the other end is left wondering why a routine payment is taking three days to clear.
The CFOs in this study have the right instincts about what needs to change. Reducing manual review, deploying AI/ML fraud scoring and implementing end-to-end straight-through processing aren’t just efficiency plays. They’re how you build a payment stack that’s both fast and trustworthy. The firms that have made these investments report dramatically lower friction costs. The gap between them and their peers is widening.
The path forward isn’t choosing between protecting your business and delighting your customers. With the right infrastructure, you don’t have to choose. But the window to act is narrowing: 56% of recurring-friction firms expect conditions to get worse before they get better.
The firms that move now will define the standard everyone else has to meet.
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Methodology
“When Controls Slow Commerce: The Data Behind Middle-Market Payment Friction,” the latest installment of the 2026 Certainty Project, is based on a survey of 60 CFOs conducted from April 9-21, 2026. The survey polled executives at U.S.-based companies with annual revenues between $100 million and $1 billion. The report examines friction in the customer experience caused by fraud detection and security controls.
