Why you need backups for your payments processing

Businesses today wouldn’t entertain the thought of not having backups for critical business functions. All technology is fallible; problems occur and when they do the level of impact felt comes down to how prepared the business is and how it deals with the problem.

Why then, are some ecommerce businesses still without a fall-back option should their payments processing solution go down? If a business can’t take payments, it can’t make revenue. It’s as simple as that. Yet this summer Worldpay suffered an outage and over the course of two weeks millions of payments to companies around the globe were affected.

For merchants, the impact isn’t only on the bottom line, it’s also felt in a loss of customer satisfaction and potential long-term reputational damage. Of course, this is not the first payment processing incident of its type. And neither will it be the last. In October of last year a PayPal outage disrupted online purchasing, giving rise to speculation around the cost to merchants.

Wake-up call

Outages of this type are – or should be – a huge wake-up call for the entire ecommerce industry. Not only do those businesses impacted by an outage suffer a downturn in short-term revenue through lost payments, they will most likely also lose potential future custom too.

If a customer is unable to make an online payment with their first site of choice, they may well choose to look for another that can take payment for the same or similar product or service.

Online shopping cart abandonment is a worry for all online businesses – lowering the percentage of shoppers who give up their purchases before checkout is a constant challenge. Statista looked into what UK online shoppers did after giving up their purchase in 2015 and found that 31 per cent went on to purchase the item with a different online retailer.

There will be many reasons for these abandonments – including available payment types, delivery options and returns policies. The data does not connect abandonment with a failed payment process, but it does serve to highlight the danger that exists in creating customer dissatisfaction with the online shopping experience. If it doesn’t work out for customers, many will go elsewhere. And not all of them will return.

Weathering the storm

In an ideal world, IT systems wouldn’t go down. But they do. Outages, technical glitches and bugs in the system are a fact of life. The successful business is prepared for this and can weather the storm when it comes.

Payment processing is one of, if not the most, critical business operation for ecommerce. A contingency plan for payment processing is therefore a must, and not having one is nothing short of foolish. Redundancy/failover options should be a standard part of the payment processor offering. There are many websites and blogs out there that provide guidance and advice to merchants engaging a payment processor. They offer valuable tips in many areas, including fees, available payment types and security.

What they don’t tend to mention is that contingency planning and a backup option for payment processing is essential. Merchants should ask their provider about these things and only be satisfied when they understand exactly how they will be supported in the event of a service outage.

One solution is to engage a second provider as backup. This payment processor would function as an entirely separate and independent secondary provider to the primary default service. In the event of an IT failure, traffic can be redirected to the backup payment processor.

Counting the cost

From surveys and studies we can find a range of estimates for the cost of downtime to businesses. The Aberdeen Group puts the figure for small businesses at up to $8,600 an hour; Aberdeen and Dyn report that 60 per cent of organisations estimate one minute of downtime to cost on average over $1,000. Neither interrogate ecommerce specifically, and the actual impact on an individual business will of course vary widely according to size and type.

For small ecommerce businesses, payment processing downtime will have a big impact. These businesses cannot readily absorb short-term losses and any long-term loss of customer trust could be devastating. Under-performing websites are one thing – if customers struggle to find information or are exasperated by slow loading pages they may certainly move on in their browsing session - but customers confused and concerned over whether a payment has gone through may abandon a retailer altogether.

As well as revenue loss, payment processing downtime can cost businesses extra money too. Customers trying to understand what’s happened to their payment may pick up the phone, and those dissatisfied with the service may complain this way too. In both cases the business sees inbound call levels go up and total call handling costs with them.

For all businesses, downtime is a serious concern for which preparation is required. For ecommerce companies, a sensible back-up plan is needed to safeguard against the serious business impact that can result from a payment processing outage.

Jens Bader, Chief Commercial Officer, Secure Trading

Image source: Shutterstock/scyther5