diff --git a/integration_tests/keysend_failure_test.go b/integration_tests/keysend_failure_test.go
new file mode 100644
index 0000000..25659c7
--- /dev/null
+++ b/integration_tests/keysend_failure_test.go
@@ -0,0 +1,118 @@
+package integration_tests
+
+import (
+	"context"
+	"fmt"
+	"log"
+	"testing"
+	"time"
+
+	"github.com/getAlby/lndhub.go/common"
+	"github.com/getAlby/lndhub.go/controllers"
+	"github.com/getAlby/lndhub.go/lib"
+	"github.com/getAlby/lndhub.go/lib/responses"
+	"github.com/getAlby/lndhub.go/lib/service"
+	"github.com/getAlby/lndhub.go/lib/tokens"
+	"github.com/go-playground/validator/v10"
+	"github.com/labstack/echo/v4"
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/suite"
+)
+
+type KeySendFailureTestSuite struct {
+	TestSuite
+	service                  *service.LndhubService
+	mlnd                     *MockLND
+	aliceLogin               ExpectedCreateUserResponseBody
+	aliceToken               string
+	invoiceUpdateSubCancelFn context.CancelFunc
+	serviceClient            *LNDMockWrapperAsync
+}
+
+func (suite *KeySendFailureTestSuite) TearDownTest() {
+	clearTable(suite.service, "transaction_entries")
+	clearTable(suite.service, "invoices")
+}
+
+func (suite *KeySendFailureTestSuite) TearDownSuite() {
+	suite.invoiceUpdateSubCancelFn()
+}
+
+func (suite *KeySendFailureTestSuite) SetupSuite() {
+	fee := int64(1)
+	mlnd := newDefaultMockLND()
+	mlnd.fee = fee
+	suite.mlnd = mlnd
+	// inject fake lnd client with failing send payment sync into service
+	lndClient, err := NewLNDMockWrapperAsync(mlnd)
+	suite.serviceClient = lndClient
+	if err != nil {
+		log.Fatalf("Error setting up test client: %v", err)
+	}
+	svc, err := LndHubTestServiceInit(lndClient)
+	if err != nil {
+		log.Fatalf("Error initializing test service: %v", err)
+	}
+	users, userTokens, err := createUsers(svc, 1)
+	if err != nil {
+		log.Fatalf("Error creating test users: %v", err)
+	}
+	// Subscribe to LND invoice updates in the background
+	// store cancel func to be called in tear down suite
+	ctx, cancel := context.WithCancel(context.Background())
+	suite.invoiceUpdateSubCancelFn = cancel
+	go svc.InvoiceUpdateSubscription(ctx)
+	suite.service = svc
+	e := echo.New()
+
+	e.HTTPErrorHandler = responses.HTTPErrorHandler
+	e.Validator = &lib.CustomValidator{Validator: validator.New()}
+	suite.echo = e
+	assert.Equal(suite.T(), 1, len(users))
+	assert.Equal(suite.T(), 1, len(userTokens))
+	suite.aliceLogin = users[0]
+	suite.aliceToken = userTokens[0]
+	suite.echo.Use(tokens.Middleware([]byte(suite.service.Config.JWTSecret)))
+	suite.echo.POST("/addinvoice", controllers.NewAddInvoiceController(suite.service).AddInvoice)
+	suite.echo.POST("/keysend", controllers.NewKeySendController(suite.service).KeySend)
+}
+
+
+func (suite *KeySendFailureTestSuite) TestKeysendPayment() {
+	aliceFundingSats := 1000
+	externalSatRequested := 500
+	//fund alice account
+	invoiceResponse := suite.createAddInvoiceReq(aliceFundingSats, "integration test external payment alice", suite.aliceToken)
+	err := suite.mlnd.mockPaidInvoice(invoiceResponse, 0, false, nil)
+	assert.NoError(suite.T(), err)
+
+	//wait a bit for the callback event to hit
+	time.Sleep(10 * time.Millisecond)
+
+	go suite.createKeySendReqError(int64(externalSatRequested), "key send test", "123456789012345678901234567890123456789012345678901234567890abcdef", suite.aliceToken)
+
+	suite.serviceClient.FailPayment(SendPaymentMockError)
+	time.Sleep(2 * time.Second)
+
+	// check that balance was reverted
+	userId := getUserIdFromToken(suite.aliceToken)
+	aliceBalance, err := suite.service.CurrentUserBalance(context.Background(), userId)
+	if err != nil {
+		fmt.Printf("Error when getting balance %v\n", err.Error())
+	}
+	assert.Equal(suite.T(), int64(aliceFundingSats), aliceBalance)
+
+	invoices, err := suite.service.InvoicesFor(context.Background(), userId, common.InvoiceTypeOutgoing)
+	if err != nil {
+		fmt.Printf("Error when getting invoices %v\n", err.Error())
+	}
+	assert.Equal(suite.T(), 1, len(invoices))
+	assert.Equal(suite.T(), common.InvoiceStateError, invoices[0].State)
+	assert.Equal(suite.T(), SendPaymentMockError, invoices[0].ErrorMessage)
+	assert.NotEmpty(suite.T(), invoices[0].RHash)
+	assert.NotEmpty(suite.T(), invoices[0].Preimage)
+}
+
+func TestKeySendFailureTestSuite(t *testing.T) {
+	suite.Run(t, new(KeySendFailureTestSuite))
+}