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Credit Card Processing Outages and the Customer Experience

Have you ever visited a store, in person or online, only to find its payment processing system was down? I think we can all agree it’s not a very good customer experience (CX).

Still, it’s the businesses that get the shortest end of the stick. They’re the ones that have to deal with the aftermath of an outage, such as customer fallout, managing publicity, and serious financial implications like lost revenue.

Here’s the thing:

Your payment capabilities are only as strong as your provider’s APIs and infrastructure. Luckily, with the right payments provider, you can avoid unnecessary payment processing downtime. In this blog, you’ll learn how outages could affect your business, your customers, and their customers—a critical factor to consider—especially going into the holiday season.

Credit card processing outages can ruin a great customer experience–and your brand reputation

‘Twas the holiday season, a major shopping time. When businesses across industries offer deals so sublime. Consumers in droves, in person and online. Ready to make a purchase, and quickly - no time. With carts fully loaded, they’re ready to pay. But then something happens that ruins their day. They try using their cards, but to no avail. A credit card outage caused the transaction to fail.

Fortunately, the above scenario isn’t too common. But when it does happen, it can result in massive losses for businesses. This is especially true during peak times like the holiday shopping season (more on this below).

That’s why it’s important to factor in the strength of a provider’s payments APIs, infrastructure, and overall reliability when considering a payments partner.

What is a credit card processing outage?

When a credit card outage occurs, it means your payment processor is down and you’re temporarily unable to accept any form of card payment. This could be a widespread outage affecting many companies or a localized problem. Either way, as any business that’s gone through one can attest, this scenario is a nightmare (before Christmas).

How do payment processing outages affect your business and the customer experience?

Why are outages such a nightmare?

Simple.

Because 65% of consumers pay with a credit or debit card for in-person purchases. For online purchases, card payments make up 70% of transactions.

With this in mind, it’s clear that even a few minutes of downtime can lead to a sizable loss of revenue. Not to mention the non-immediate effects like loss of trust in your and your customers’ brand. In case you’re curious, 60% of outages result in $100,000 or more in total losses—11% to 15% of outages amount to as much as a million.

Outages are particularly concerning for software companies that offer payment processing to their customers. After all, it’s the business that couldn’t complete the transaction that customers will connect an outage with—regardless of what caused it.

For example, PWC found that 32% of customers will leave a brand they love after a single bad experience. That increases to a staggering 92% after two or more undesirable occurrences. As unfair as it may be, a payment processing outage goes down as a negative interaction in a customer’s book, which can result in them turning to one of your competitors instead.

It’s no wonder, then, that 84% of companies that prioritize the customer experience see increased revenue. For SaaS companies, improving the CX can potentially double revenue in three years' time. As payments are a huge part of the customer experience, it’s prudent to prioritize and thoroughly vet the reliability of your provider.

Holiday stats for SaaS platforms

It’s common knowledge that retail and B2C sales kick into overdrive during the holidays. This season will be no different. It’s predicted that retail sales will exceed $235 billion USD in 2022—a $127 billion increase since 2017.

But what about B2B SaaS companies?

While deal closings tend to slow down in Q4, especially for businesses with long sales cycles, many SaaS companies finish strong. In fact, FastSpring found that their customers’ best overall quarter was Q4 after analyzing a random sample of their B2B and B2C customers over the past three years.

Tip: Don’t be another statistic. The rate of cart abandonment hit a whopping 69.80% in 2021. While it can’t be avoided entirely, you can significantly reduce the number of buyers jumping ship by optimizing the checkout process and owning more of your payments experience.

Common reasons for credit card outages

The cause of an outage could be an issue on your end, which is something you have some control over fixing. When it’s on your payment provider’s end, however, your hands are tied. Regardless, the first step is to figure out the root cause.

Here are a few of the most common reasons for credit card processing outages and failures.

Payments API failures and errors

Unfortunately, not all fintech platforms are created equal. The quality of a payments provider’s technology affects processing uptime and performance. If APIs are unstable or broken, it can lead to an outage. This can also result in slow payment processing times—all of which make for a bad customer experience.

Red flags and causes for API failures or errors:

  • Overcomplicated code

  • Hard-to-understand parameter functions

  • Poor API design decision

  • Outdated technology

  • Hardware malfunctions

No matter how well constructed, payment terminal devices can fail or malfunction. This, of course, can lead to a failed transaction.

Hardware that can disrupt payment processing:

  • In-person payment terminals and point-of-sale (POS) systems

  • Card readers

  • Servers (on your side or your provider’s)

  • User error (swiping the card wrong, etc.)

Network and internet connectivity issues

If there’s no technical issues on your end or internet outages in your area, the problem is likely stemming from your payments provider. This leaves you at the full mercy of your provider, as you’ll have to wait until they get back up and running. This could be minutes or even hours.

Causes for provider-related internet and network issues:

  • Poor performing or frequently broken APIs

  • Hardware failure

  • Software failure

  • A service failure that the provider uses (e.g. a processor or DNS)

  • An internet outage affecting your provider

Everyone knows the pain of losing an internet connection, but the fact is, customers expect your product or service to be available whenever they need it. Immediacy is the modern payments world we live in.

Ways to avoid and mitigate an outage

While some causes for outages are out of your control (such as a power or internet outage), there are ways you can avoid them. At worst, you can at least “soften the blow.”

A reliable payments provider

The best way to avoid a credit card processing outage in the first place is to partner with a reliable payments provider.

Here are some points to consider:

  • How strong is their infrastructure?

  • What is their uptime? What is the provider’s outage history?

  • How well-designed are their payments APIs?

  • Is their documentation detailed and easy to understand?

  • What is the provider’s disaster recovery plan (DRP)?

  • Does the provider have redundancy for its critical services?

Tip: Finix’s average uptime is 99.999%. To get a better idea of what’s under the hood and how our APIs work, visit our docs. Finix is known for its world-class documentation.

Redundancy

Another way to avoid an outage is by partnering with a provider that has redundancies built into its product. For example, Finix is multi-regional, so if there’s an outage in one region where a customer is making a purchase, the payment transaction is routed to another region, where it can be successfully completed. The technical term for this process is called failover.

Finix also partners with multiple gateways, processors, and payment terminal manufacturers to bring optionality and fail-safes to our customers.

Alternative payment methods

If the outage is unavoidable, you’ll need to manage the situation. The most obvious answer is by having alternative payment methods available. For in-person payments this could be cash or check. You could also take credit card payments manually with a good old-fashioned card imprinter (if you have one).

It may also be possible to accept payments via a mobile device if you have a cell connection and mobile payments are available at your business.

Online options are more limited. If your company has the capacity and is in compliance, it may be possible to take orders over the phone and enter them into an offline POS. This, of course, is not ideal.

Quotation mark

Look for a payments provider whose maximum transactions per second (TPS) is at least 2,000 or more. For example, Visa processes over 1,700 transactions per second on average but has the capacity to process as much as 24,000 TPS.

Reliable payment terminals and updated technology

Some outages are a result of unreliable equipment or antiquated technology. Modern platforms are more able to handle the additional strain of holiday traffic

This is also where your provider’s tech and payment devices come into play. If its payments APIs and systems are unreliable or running on legacy technologies, your chances of a credit card processing outage increase. A provider with strong, reliable APIs and a range of payment terminals for in-person payments can eliminate this issue.

Troubleshoot payment devices

If your equipment and technology are up-to-date and you’re still experiencing payment processing issues, try troubleshooting your devices first. Just like a computer or an internet router, sometimes a device just needs a restart. At the very least, it will help narrow down the cause.

Did you know?: Finix’s in-person payments offering is an all-in-one payments solution. Your payment terminals are preloaded with the right software (key injection), distributed, and enabled through our gateway—and it only requires one integration!

Industries most affected by credit card processing outages

While a payment processing outage is bad news at any time of the year, it’s especially bad during peak times like the holiday shopping season. This is because the last quarter of the year is an opportune time to run specials to attract new customers and retain current ones.

Businesses most affected are B2B and B2C e-commerce businesses and software platforms that cater to merchants in the retail, restaurant, and health and beauty industries. If your business takes part in holiday-driven campaigns or relies heavily on other peak shopping times, it's crucial to have a highly reliable payment processor.

Outage impact on e-commerce businesses

E-commerce businesses stand to take a massive hit from any outage that affects their ability to process credit cards. To give you an idea of how your business might be affected, here’s some data on some well-known brands.

Based on their estimated annual revenue, Home Depot would experience a revenue loss of $14,474.40 a minute during an outage, Best Buy $11,647.20, and Staples $4,462.80. And that's per minute! Most outages last hours.

SaaS verticals most affected by holiday outages:

Retail management SaaS for small businesses

The retail sector is a given as businesses that rely on retail SaaS typically receive exceptionally high transaction volumes during the holidays. For some perspective, US retail spending as a whole is projected to exceed $6.7 trillion by the end of 2022.

Their customers:

  • E-commerce and retail stores

  • Product distributors

  • Wholesalers

  • Manufacturers

Health, beauty, and club management software

These types of businesses cater to customers that are well known for offering holiday discounts and incentives, as well as on into the new year when people are particularly incentivized to join gyms and clubs. The holiday season also sparks a large volume of hair and beauty appointments—got to look good for all those photos!

According to Gold’s gym, customers usually get the best deals on gym memberships in December. Hair salons see a sizable increase in service, retail, and gift card sales during the holidays, especially in December.

Their customers:

  • Sports clubs, clubs and associations

  • Gyms

  • Wellness companies

  • Hair salons and beauty companies

Software management for churches and non-profit organizations

The holiday season sees a substantial increase in donations. The demand for digital giving options is also on the rise. According to NP Source, 54% of people prefer giving online via credit or debit card.

Their customers:

  • Churches

  • Non-profit organizations

  • Charities

Software management for restaurants

While Mother’s Day and Valentine’s Day lead the pack when it comes to holiday dining in the U.S., the restaurant industry sees an increase in demand during the last quarter of the year. This is due to business functions, parties, and friends and family gatherings. For food delivery services like DoorDash, Christmas Day, New Year’s Eve, and New Year’s Day are the most popular.

Debit and credit card transactions make up 70.1% of restaurant purchases. Furthermore, 51% of people use an online delivery service to order food, and it’s forecasted that online food ordering will top $220 billion by 2025.

Their customers:

  • Restaurants

  • Food trucks

  • Online food ordering and delivery services

The importance of reliable payments API and infrastructure

When it comes down to it, it’s all about the customer. This applies to any business in any industry—whether it’s B2C or B2B. Without customers, no company would exist. That’s why payment processing plays front and center in everyday life.

The truth is if your payments partner isn’t reliable, your customers can’t make money. If they can’t make money, they look elsewhere for service.

Finix is known for its powerful and reliable payments APIs—99.999% uptime. We also provide exceptional documentation and 24/7 support to ensure continuous payments processing for you and your customers.