by Ben Dwyer In today’s increasingly cashless world, many businesses rely on payment processing for credit and debit cards. But what happens when your payment processing system fails?
There are a number of reasons that you might find yourself unable to take credit card payments at your business. Maybe you have an issue with the machine itself, your internet goes out, or the payment network itself goes down. (It’s happened!) For small businesses, even short amounts of downtime mean lost revenue and unhappy customers. You still have sales to make, but these days many customers don’t carry cash. What options are there?
In this article, I’ll talk about the types of problems you may encounter, what they mean for your business, and the plans you can put in place now to stay operational and minimize downtime damage.
Consequences of Payment System Outages
Of course, the biggest possible consequence is revenue loss. With many customers not carrying cash, they may simply walk away without making a planned purchase. It’s a toss up on whether they will return later or simply go to a competing store to get their items.
Atlassian reports staggering numbers of lost revenue for both large and small businesses. It estimates approximately $137-$427 lost per minute of downtime.
Another possible issue is negative customer perception. While many customers will forgive and forget a one-off situation, if you experience outages regularly (such as with a faulty credit card machine that works inconsistently) you will damage your reputation and lose customers. Not all outages will be in your control, but it’s a good idea to minimize the risks whenever possible.
Types of Outages
There are several “types” of outage, related to the different failure points along a transaction’s processing path. If any one of these companies or services has an issue, it will impact your ability to take cards.
Card Network Outages
Visa, Mastercard, Discover, or Amex could have a card brand-specific outage, causing problems accepting any of their cards, using any machine or method.
In 2018, Visa experienced a major issue that led to an outage for European customers for several hours. Some United States businesses have experienced shorter (45-minute) outages as well. That’s not a lot of time in the grand scheme of things, but if you’re running a busy store or restaurant and suddenly can’t take Visa cards, it can feel a lot longer. A card network outage is typically a wide-scale, nothing-you-can-do type of outage.
Fortunately, actual card-brand outages are rare. But some other types of downtime in payment processing listed below are much more common.
Payment Processor Outages
The payment processor you use for your transactions could also be the culprit. With a payment processor outage, the processing company that handles the “backend” transaction processing has an issue that prevents processing cards.
This includes companies like Fiserv, Elavon, and Worldpay. Note that all payment processing companies run on one of the “backend” processor’s networks. Even though you may not have a direct account with a company like Fiserv, you may be affected by their outage if your processor works on their network.
Payment processor outages are also not very common, but when they happen, they will affect all businesses using that backend processor.
Payment Gateway Outages
A particular concern for online businesses, a payment gateway outage occurs when your payment gateway company (such as Authorize.Net or Stripe) goes down. When this happens, it’s limited to the businesses that use that gateway.
Software companies, including payment gateways, often publicize their “uptime” stats to show their reliability. Some, like Authorize.Net, even provide “system status” pages to show the current state of their systems.
Internet Outages
Since many credit card machines connect to the internet these days, a problem with your internet service provider will lead to an inability to take cards. Like payment gateways, many ISPs will publish their “uptime” stats and offer status pages so you know if an internet problem is with your specific connection, or a wider outage.
If your internet provider is not reporting an outage, you’ll know you have a local problem. I’ll get into possible solutions later in this article.
Credit Card Machine Outages
Lastly, your credit card machine or POS system itself may stop working. If it’s not an internet issue but you’re not able to accept cards, it could just be that you have a malfunctioning machine. This is particularly true of older systems, but even newer models can sometimes just break down.
The first four types of issues will affect multiple businesses and are largely outside of your control. The last one will only affect your business.
Strategies for Handling Outages
So, what can you do about unplanned payment processing downtime? First of all, plan ahead. Don’t wait for an outage to happen before thinking about your alternatives. Consider these options:
Have “Backup” Payment Methods
These days, there are more options than ever to securely accept cards. If your primary payment system goes down, turning to a pre-planned backup system can be a lifesaver. Consider keeping a mobile card reader on hand so you can accept payment through your phone or a tablet. This is a great option if you have issues with your primary credit card machine or the store’s internet, and most processing companies offer mobile readers.
You can also consider accepting payment via QR code for compatible services like Venmo or Paypal. Be sure you’re following any rules for business use of those systems, not peer-to-peer, to avoid any issues.
Enable “Offline” Mode on Your Machine
Many modern credit card machines and POS systems offer an “offline” mode for accepting credit cards when the internet or processing network is down. Offline mode lets you continue to accept the payment and simply processes the payment later, when the system is back online. This method is also sometimes called “store and forward.”
Note that offline mode / store and forward sometimes introduces delays in receiving the funding, simply because it won’t process until the system comes back online. In some cases, that may mean it isn’t processed before cutoff times for next-day funding, for example. Still, delayed funding is better than a lost sale, and offline mode can be a huge help for those unexpected downtimes.
Ask your credit card processor if your credit card machine or POS system supports offline mode and how to use it.
Install an ATM
Another option you can consider is installing an ATM in your store or restaurant. Many companies offer this service, though fees and contracts vary wildly. If you choose to install an ATM, you can offer that alternative to customers in the event of a machine outage.
It’s always a good idea to put up signs or inform customers immediately if you are experiencing issues with your credit card payment systems rather than wait for them to get to the register. If you put up a sign announcing temporary downtime and accepting only cash, be sure to include that you have an ATM available for their convenience.
Offer a Small Cash Discount
Particularly effective when paired with an available ATM, you can help close the sale and minimize customer frustration by offering a small cash discount for the inconvenience. You can even choose to implement a cash discount all the time as a way to help minimize processing fees.
At the end of the day, it’s impossible to prevent all situations that could lead to credit card processing downtime. But it’s critical to put a plan in place before you need it. The worst time to think about payment outages is when you’re experiencing one, with customers lining up angrily or leaving the store without making a purchase. Consider the strategies above and determine what will work for your business, and then work with your processor to ensure you have the right equipment for your contingency plan.
