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Maintaining business continuity during payment outages

When considering the structural shift away from cash towards digital payments, a trend only accelerated by the COVID-19 pandemic, it’s little wonder that retail payment outages continue to garner such a significant degree of public attention.

The once steady move away from cash has gained serious momentum over recent years – with cash used just 32 per cent of the time in June 2020, down from 75 per cent in 2007. A 2021 Global Payments Report predicts the Australian economy will be 98 per cent cashless by 2024.

While one can safely assume this pace of change to continue unabated, what’s less certain is the ability of the retail payments system – and the myriad networks, systems and infrastructure it’s connected to – to keep up. Recent RBA data indicates a significant increase in the frequency and duration of retail payments outages – surging to around 2300 total hours in 2020, from less than 1000 in 2017.

With millions of Australians now preferring to pay using digital means, the need for businesses to maintain resilient and reliable payment systems is essential.

What’s at risk during an operational outage?

Now more than ever, merchants are reliant on payment technology to operate, whether that be in a retail store via payment terminals or selling online through a website, and Australia’s predominately cashless society leaves no room for outages to occur.

Developing and maintaining resilient, flexible payment systems is a complex process that requires significant expertise and investment – but investment that pales in comparison to the financial hit that businesses can take both during and in the aftermath of a terminal outage, not to mention damage to brand and reputation.

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What’s more, the business risks involved when online payment systems fail and transactions are forced offline can include the costs of lost transactions, chargebacks and a heightened vulnerability to fraud.

As consumers have continued to embrace digital payment methods and, in the process, become accustomed to a faster, more efficient and more reliable payments process, their expectations on businesses to resolve operational outages in a timely manner have intensified.

The ability to maintain business sales during outages by ensuring resilience against technology failures can make a world of difference, not just for a business’ bottom line, but also to the strength of consumer trust and loyalty invested in its brand.

Ensuring operational resilience

While Business Continuity Planning (BCP) is second nature to many, especially large retailers, it’s typically not a focus for smaller retailers, particularly SMEs. A thorough contingency plan is essential for all businesses, regardless of size, and should cover all intersection points of a transaction – from telcos, to energy companies, banks, Point of Sale (POS) and payment hardware and software providers.

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To enhance protection against outages, businesses should:

  • Ensure that all POS PC software is up to date, as new versions may incorporate improvements in performance, bug fixes and help desk tools;
  • Consider deploying payment terminal solutions that can offer offline capability;
  • Consider a secondary telco option using a router with cellular capability so terminals can easily swap over if the event of a primary telco outage.

Although many large merchants run scheduled failover tests to assess the effectiveness of their disaster recovery strategy, it is important that smaller businesses introduce similar processes. 

These tests ensure any weaknesses are identified and mitigation actions implemented, so that when an outage occurs, the business has a plan in place that allows them to continue trading and accepting electronic payments.

Fortunately, advances in payments technology, including the development of business continuity technology (BCT) and mobile payment solutions which can act as a back-up option to hardware, are proving of huge benefit for retailers looking to improve their operational resilience.

Maintaining a positive payments experience

While it’s difficult to find an industry that hasn’t been impacted by the pandemic, the retail payments landscape – disrupted by significant changes to the way people pay and rapid advances in payments technology – is one that’s evolving particularly fast.

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In response, scrutiny of the Australian Payment System has also ramped up, with the RBA’s current Review of Payments Regulation looking closely at the resilience and stability of the payments network and initial conversations being had about the need for stronger protections for small businesses against the growing prevalence of electronic payment outages.

As the direction of new policy and regulation becomes clearer, including a sharpened focus on safeguarding the integrity of the payments system, businesses must ensure they have the plans and processes in place to effectively manage technology failures so they can continue to operate during outages. Their customers must be able to make purchases and not be inconvenienced.

While recent figures indicate an encouraging return in retail confidence, much rests on our ability to continue facilitating the fast, flexible, secure and convenient payments process that today’s consumers are reliant upon.

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Jan Mason

Jan Mason

Jan Mason is CEO of Quest Payment Systems, based in Melbourne. She leverages more than 30 years’ experience in the payments arena, having contributed to many industry forums including 3DES, EMV, BPAY and card scheme risk committees. Before joining Quest, Jan held various senior management positions at National Australia Bank.

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