BNPL in South Africa: Payflex, PayJustNow, MoreTyme and Float Compared
October 15, 2026Disclaimer:
This blog offers general guidance based on information available at the time of publication. For the most up-to-date details, please contact Netcash or other service providers directly.
A failed payment may seem like a simple matter of money not reaching your account. But for a business that relies on regular customer payments, the impact goes much further. A failed collection creates more admin work, triggers follow-ups, and delays expected revenue.
When payment failures happen regularly, these administrative and financial barriers add up. They range from daily operational disruptions and additional recovery costs to delayed cash flow, repeated collection attempts, and rising customer churn from frustration.
The good news is that you don’t have to treat every failure as an unavoidable part of collections. By understanding why payments fail, verifying account information early, and calculating the cost of failed collections, you can find out where your payment process needs attention.
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What does a failed payment really cost your business?
The most obvious cost of a failed payment is the rand value of the money you were not able to collect. But this is only the starting point. Every unsuccessful collection creates extra work in administration, reconciliation, and recovery, taking time away from sales and marketing.
Over time, the real cost of failed payments can include:
- Lost or delayed income: Revenue does not arrive when expected. This makes it harder to plan supplier payments, salaries, operating expenses, and other commitments.
- Finance and reconciliation time: Failed transactions must be identified and reconciled against the original collection. If you do this manually, reconciliation becomes highly labour-intensive and increasingly difficult to manage as transaction volumes grow.
- Collections/admin effort: A paid invoice ends there for the collections department, but a failed payment creates another task. Someone will need to investigate the failure, update records, contact the customer, and eventually begin the recovery process.
- Customer follow-up: Sending reminders through emails, phone calls, or payment links is a logical next step after a payment failure. However, repeated manual communication consumes considerable time, particularly when you have a large customer base.
- Recovery attempts: You can recover some failed collections with a later attempt, but you need to understand why the original transaction failed before deciding whether to retry, wait for a more appropriate collection date, or use another payment method.
- Cash-flow forecasting impact: You can have sales and still experience unstable cash flow if collections are not timely. Frequent payment failures widen the gap between expected revenue and actual money received, making forecasting and planning difficult.
- Customer experience implications: Payment issues can create unnecessary friction for customers. Limited payment options, multiple reminders, and aggressive retries without a clear collection and recovery communication process can frustrate customers.
Common causes of payment failures
Payment failures can happen for various reasons, and the cause often determines how you should respond. Not every failure is preventable. However, identifying the root cause helps you determine which problems you can address before collection and which require a recovery process afterwards.
Incorrect or outdated banking information
Incorrect account numbers, branch codes, or personal customer information can prevent a collection from being processed successfully. Details can also become outdated when customers’ bank accounts change or expire, and they don’t update their records.
Account Verification Service (AVS), available through Netcash Risk Reports, can help verify information such as the account number, account-holder details and account status, helping you identify potential issues before collection.
Insufficient funds
A valid or active bank account does not guarantee that enough money will be available when a debit order goes off. Customers may receive their income at a different time from your collection date, or their available balance may temporarily be too low, leading to a failed collection.
In such cases, account verification alone will not prevent the failure. You need a sensible recovery process, which could include well-timed payment retries, prompt but softly worded alerts, or Payment Request links that offer alternative payment methods.
Technical or payment gateway issues
These may include connectivity issues, processing errors, integration problems, or temporary disruptions between payment systems. For businesses, the important distinction is whether the issue is isolated or recurring. A single technical failure may require a retry, while repeated failures could indicate a payment setup or integration problem that needs investigation.
Monitoring failed transactions and their reasons can help your finance or technical staff identify recurring issues and prevent the same problem from affecting future collections.
Timing issues
The timing of a collection can affect whether a payment succeeds. For example, a customer may have sufficient funds available later in the month but not on the date the debit order is presented. This is particularly relevant for businesses collecting recurring payments from customers whose income or payment cycles don't align with the collection date.
Reviewing when failures occur can help you identify patterns. If many failed collections occur around a particular date, your business may need to reassess its collection timing or recovery process rather than treating each failure as an isolated incident.
Customer disputes or authorisation issues
Not every failed or reversed payment is caused by incorrect banking information or insufficient funds. Customers may dispute, cancel, or question whether a payment was properly authorised.
Clear debit order mandates and proper authorisation records can help reduce disputes around recurring collections. Keep accurate records of customer instructions and payment arrangements so they can investigate disputes efficiently.
When disputes or reversals happen repeatedly, look for patterns instead of retrying the debit. A recurring issue may show that the mandate, arrangement, or account details need reviewing.
Are disputes becoming a recurring issue?
Read this guide on best practices for debit order collections to learn how to reduce disputes and failed payments.
How account verification can reduce avoidable collection failures
One of the most effective ways to improve payment collection is to identify certain problems before you submit a collection request. Account Verification Service (AVS) can help your business check whether customer banking details match the information held by the bank.
Depending on the verification service, checks can include whether an account exists, whether it is active, whether account-holder details match, and whether the account can accept debit orders. This adds an extra layer of verification, ensuring a collection attempt is viable.
For example, imagine a customer provides banking details when signing up for a recurring service. Without verification, you may only test those details when you submit the first debit order. If the information is incorrect, the first collection attempt is likely to fail.
With account verification, you can catch mismatches early, giving the customer a chance to correct the information before collection. This does not mean AVS prevents every failed payment. It cannot predict whether there will be sufficient funds on the day, and a valid account can still produce an unsuccessful transaction for other issues. So, the value lies in addressing avoidable account-information problems before they become collection problems.
Note: A failed check does not automatically mean fraud. AVS mismatches may be caused by typos, inactive accounts, or incorrect customer details, so investigate before proceeding.
Improve cash flow through smarter payment verification
Payment verification is most useful when it becomes part of your broader collection process, not a once-off check. The goal is to create a process that identifies potential issues early, collects payments efficiently, and gives you clear details when something goes wrong.
Verify at the right point in the customer journey
The best time to discover incorrect banking information is generally before it causes a failed collection. Consider where account verification could fit into your customer journey.
- During onboarding: When a new customer signs up for a recurring service, verify their banking information before adding it to your collection process.
- When banking details change: If a customer provides new account information, verify the new details rather than automatically replacing the old information.
- After repeated failures: If the same account repeatedly fails because of banking-detail issues, review and verify the details rather than continuing to retry.
This creates a more proactive process. Instead of waiting for the banking system to tell you something is wrong, you can identify certain problems earlier.
Move from reactive collections to proactive verification
A reactive process might look like this: Submit collection → payment fails → investigate → contact customer → update information → retry
A more proactive process is: Capture information → verify → collect → monitor → identify exceptions → recover failed payments if necessary
The second process does not eliminate failures. Instead, it aims to prevent avoidable ones while making the remaining exceptions easier to manage. This distinction matters if you run a business with recurring collections. When you are processing lots of payments, even small improvements in payment detail quality can reduce the number of tasks you need to handle.
It also gives your business more useful information. Instead of treating every failed transaction as the same problem, you can identify whether failures are due to account information, insufficient funds, account status, debit order disputes, or another cause.
Practical KPIs to track
Tracking the right metrics helps you see where payment failures are happening, what they cost, and where you can improve collections.
Failed payment rate
- Calculate the percentage of collection attempts that fail
- Track the rate over time to spot increases or recurring issues
Failed payment value
- Measure the total rand value of failed collections
- Compare it with the total amount you expected to collect to understand the cash-flow impact
Recovery rate
- Track the percentage of failed payment value you successfully recover
- Compare recovery rates across different failure reasons
Average recovery time
- Measure how long it takes to recover a failed payment
- A longer recovery time can create greater pressure on cash flow
Repeat failure rate
- Identify the percentage of customers or accounts with multiple failed collections
- Look for recurring problems that may require a different approach
Failure rate by reason
- Group failures by cause, such as incorrect details, insufficient funds, or disputes
- Focus your prevention efforts on the most common causes
Cost per failed collection
- Estimate the staff time, follow-up and processing costs linked to each failure
- Use this to understand the operational impact and cost of failed payments
Cost of avoidable failures
- Identify failures that better verification or correct account information could have prevented
- Compare the cost of prevention with the cost of recovery
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Frequently asked questions about failed payments
Reduce avoidable payment failures with Netcash
Failed payments are not simply a collection problem. They can create additional administration, delay expected revenue, and make cash flow harder to manage.
The first step is understanding where your failures come from. From incorrect account information and insufficient funds to timing, technical issues and disputes, different causes require different responses.
Account verification can help you address some problems before collection, while clear recovery processes can help you handle failures you can't prevent. Tracking metrics such as failure rates, recovery times and the cost of failed collections then gives you a clearer picture of where your process needs attention.
The goal is not to eliminate every failed payment. It is to reduce avoidable failures, recover unsuccessful collections efficiently, and make your payment process easier to manage as your business grows.
Want to reduce the admin associated with failed collections?
Reach out to Netcash to explore our payment and account verification solutions to help make your collections more efficient.
Author:
Candice Sergeant
Product Manager
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Candice Sergeant is a digital dynamo at Netcash, where she’s on a mission to help South African businesses level up their online game. As an eCommerce Product Owner, she’s got her finger on the pulse of the latest trends and technologies, constantly seeking out ways to boost sales and streamline operations. With a knack for spotting opportunities and a passion for innovation, Candice is your go-to guide for taking your e-commerce business to the next level.
Disclaimer:
This blog offers general guidance based on information available at the time of publication. For the most up-to-date details, please contact Netcash or other service providers directly.
