Avoiding The Hidden Cost of Payment Failures

Digital payments have become increasingly popular over the last several years. In fact, according to Forrester’s latest Consumer Benchmark Survey, 78% of respondents indicated that they have used digital payment methods in the past three months to make a purchase – up from 69% in 2023 and 64% in 2020. However, this growth in popularity doesn’t mean that organizations have mastered digital payments.

In a recent webinar, The Hidden Cost of Payment Failures, I sat down with guest speaker Lily Varón, Principal Analyst at Forrester, and Zeb Winzenried, Senior Director, Testing Services at Applause, to discuss emerging trends and common pain points in the payment space. Keep reading to glean key insights from recent Forrester research and learn how you can protect revenue across markets, methods, and moments.

Where payments are currently failing

Payments fail for all sorts of reasons. Sometimes they fail because of a technical problem that has to do with the way an issuer is consuming the data around a transaction. Other times, there are insufficient funds or suspicious things about the transaction that trigger an issuer’s algorithm to reject the payment. However, payments also tend to fail because of poor user experiences.

Maybe you are “displaying a currency that is not the currency that the consumer is used to paying, or your checkout flow is clunky and ugly,” said Varón. Other examples include having to type a bunch of different things in or having to select a credit card type when the number already provides that information. There are “good design and localization principles that should come into play that I would argue are reasons that payments fail,” explained Varón. Technical issues and design elements are both critical pieces of the puzzle that is your payment experience.

“All these things that can affect the payment experience and affect whether things work can happen at any time,” said Winzenried. “And it can be really frustrating for the end customer, especially. We call these silent declines or silent issues where you have no idea as an end consumer where it happened. It just says payment failed. ‘Does that mean that I don't have enough money in my bank account? Does that mean I entered something wrong?’” As a user, it can be really hard to tell – so building a positive experience that takes those factors into consideration is crucial for success.

However, the fragmentation of payment methods has only made this task more complicated. “We have data that shows that digital payment methods continue to disintermediate other payment methods,” explained Varón. “Credit cards and debit cards might still be the thing that is powering that payment, but that digital payment method is what is sitting between the merchant and that consumer. And the digital payment methods have been ticking up. Consumers are continuing to adopt it.”

PayPal and Apple Pay are two such methods. Even with these modern and convenient payment methods, there is the potential for failure. “If you've only got one or two cards connected to your Apple Pay, it’s a pretty straightforward experience,” said Winzenried. But “if you have five different credit and debit cards connected, switching those on the fly and making sure that the address you've attached is the correct one” can be a challenge.

With so many systems trying to be the system of convenience, things can and will go wrong. According to Forrester’s March 2025 Consumer Pulse Survey, “more than half of online US adults made a call to a contact center about a bill or payment in the last 12 months,” said Varón. Of those, 11% of respondents indicated that they called to dispute the value of a charge, while another 10% said they called to troubleshoot an online login or payment issue. With so many ways that payments can fail, thinking holistically about the payment experience and overall customer journey is vital for successful transactions.

Agentic commerce and how consumers feel about AI in payments

AI is playing an increasingly large role in the buyer journey — not just in the context of chatbots and customer support, but also agentic commerce. However, “agentic commerce can’t happen unless we support agentic payments,” said Varón. “And agentic payments can’t happen and consumers won’t enable it unless we have protections in place.”

To better understand how willing modern consumers are to participate in agentic payments, Forrester surveyed over 800 consumers across the US, UK and Canada. As it turns out, most consumers (74%) are uncomfortable with agentic payments even if they were able to set spending limits and create rules in advance. Millennials and Gen Z are more likely to be comfortable or neutral with agentic payments, but overall there is a lot of hesitation when it comes to agentic commerce.

To gauge the precise boundaries of consumer comfort with autonomy in agentic payments within that 74%, Forrester asked consumers about the most autonomous payment behavior they would allow from an AI agent:

• 40% said “I would not allow any autonomous payments from an AI agent at all.”
• 31% said “It can recommend items, but I pay manually.”
• 16% said “It can fill the cart/checkout, but I approve payment every time.”
• 7% said “It can pay autonomously only for subscriptions/bills I pre-approved.”
• 3% said “It can pay autonomously for routine purchases under a dollar limit I set.”
• 3% said “It can pay autonomously for most purchases within my rules.”

When it comes to actual autonomy, where the agent is making a payment on behalf of a customer, only 6% of customers indicated that they are comfortable there. “What drives this is concerns about loss of control. The concerns are about errors and about who is going to be liable when things go wrong,” said Varón. And these concerns are valid: “We haven’t yet seen or heard any protections come from the issuers or card networks for agentic transactions because we have yet to really figure out how to secure this at scale.”

“If you’re a merchant, what do you do now while you’re waiting for all this to happen?” asked Winzenried. “Do you go ahead and update your terms of service to say that anything goes? Or do you start prepping your website to handle potential autonomous purchases?” Beyond a lack of consumer adoption, there are a number of risks for merchants to consider. Despite that, the foundations of agentic commerce are in place and preparedness will be key for those who want to seize the moment.

The truth about adding new payment methods

The advent of buy now, pay later introduced an era in which ecommerce companies are constantly seeking out the latest and greatest payment method to add to their platform. Different target audiences prefer different payment methods, and determining the ones they prefer and putting those in place is important. However, “there are diminishing returns at a certain point,” said Varón. “It becomes antithetical to a good experience to have a laundry list of payment methods.”

Data from Forrester’s Consumer Benchmark Survey (2025) highlight those differing preferences, showing that younger consumers are more comfortable paying in emerging commerce touchpoints. According to the survey, 50% of US online adults ages 18-24 are comfortable making transactions via online chat with a company. That number drops to 40% when looking at all US online adults. For transactions via voice with a virtual assistant, the survey yielded similar results, with 45% and 32% saying they would feel comfortable, respectively.

This trend continued when respondents were asked about their specific preferences for making payments. While 56% of all US online adults prefer using point-and-click navigation buttons or menus, that number drops to 44% for adults ages 18-24. And although only 29% of all adults prefer typing a text or instant message via a chat or messaging interface, that number bumps up to 34% for consumers aged 18-24.

“I think what this data is showing us is that if you provide better payment experiences, that's what really matters — not necessarily the payment mechanism that's underneath it,” said Varón. “Not to say that payment methods don’t matter. But once you have payment methods that have received critical mass in a certain geography… you get more bang for your buck by improving the payment experience (at a certain point) than you do by adding another payment method.”

Winzenried agreed, stating that “you don’t need to have everything under the sun… but you do want to be cognizant of what’s out there and what’s popular and what’s growing. If something is that new up and comer that jumps ahead of everything else, you want to be sure that you’re enabling it and having a great customer experience. Because when you have the great experience, that’s when people come back and keep shopping.”

Which flaws are internal QA teams missing in the payment experience?

There are some elements of the payment experience that frequently escape into production unnoticed. Internal testing is great, but making sure that everything’s working right is easier said than done. Winzenried mentioned a recent example where a merchant in Brazil saw a significant drop in their debit approval rates and didn’t know why:

“Applause went in, and we found a bunch of testers in our community to attempt purchases with various credit cards, debit cards, and combo cards (a unique offering in Brazil). What we found was that 100% of the debit cards from smaller banks in Brazil were being declined. The merchant went back to their processor and realized they had accidentally turned off an entire bin range on the back end, and everything was declining for debit. So that was a huge loss and a huge disruption that we found just by testing outside of the norm.”

Another example is pop-up windows and other features and how they perform across different devices. Not everyone has a newer phone, and if a pop-up window shows up incorrectly (or doesn’t show up at all) on a user’s older device, their experience will suffer. With so many different options in the market today, organizations can ill afford to let poor user experiences push customers toward the competition. That means that testing payments against unique edge cases is critical.

“The other mistake people make is when they benchmark themselves against their peers,” said Varón. “A customer’s expectation for your customer experience is informed by the last best experience they had — with you or with anyone else.” Every positive interaction that a customer has raises the bar, and excellent testing on a broad range of experiences is the best way to inform your design and your payment method choices accordingly.

Test for success

Most buyers see payments as a holistic experience, extending far beyond the movement of money. To reduce payment failures, your testing strategy should evaluate:

• The end-to-end experience, from account login to post-purchase communication, returns and exchanges.
• Where AI and automation can potentially introduce friction into the experience.
• Real-world payment scenarios outside the happy path – beyond what can be simulated in a lab.
• Which payment methods customers actually want – more PIs aren’t always better.
• Where crowdtesting can address gaps in coverage.

There’s only so much you can learn from the analytics your payment partners share with you. Crowd testing is a great complement to analytics and is a crucial driver of effective payment strategies.