Dark Mode Light Mode

Ensuring System Resilience in the Rapidly Evolving World of Digital Payments

digital payments digital payments

In recent years, digital payment methods have rapidly overtaken traditional cash transactions in major global economies, reflecting shifts in both technology and consumer behaviour. Credit and debit cards, especially those utilizing contactless technology, have surged in popularity, becoming the dominant choice in almost all types of transactions worldwide.

by James Stark

Additionally, many individuals are choosing digital wallets, stored on their mobile devices, in place of physical cash and traditional wallets. These trends indicate a significant shift in how consumers interact with their finances and the businesses they frequent, leading to an increasing reliance on robust digital payment systems.

Advertisement

Given the rapid rise of digital payments, businesses must prioritise offering secure, efficient, and varied digital payment options to meet their customers’ expectations and remain competitive. Any flaw or disruption in a payment processing capability can severely affect operations, highlighting the importance of reliable, resilient payment systems. From connectivity failures and hardware malfunctions to software glitches and potential cyber threats, businesses face numerous potential issues that could disrupt digital transactions. For these reasons, enterprises are investing in the resilience and robustness of their payment systems, aiming to prevent disruptions that can lead to transaction failures, lost sales, or damage to customer trust.

The High Stakes of Digital Payment System Downtime

With digital payments now essential for day-to-day transactions, failing to process these payments can have immediate and far-reaching consequences. Beyond the obvious issue of lost sales, a poor payment experience can lead to customer dissatisfaction, damage to the brand’s reputation, and even regulatory repercussions in certain cases. Businesses in any sector, unable to meet customer expectations, risk losing out to competitors with smoother, more reliable digital payment experiences. In this landscape, ensuring system resilience is not merely beneficial but crucial for long-term commercial success.

Increased reliance on digital payments necessitates a robust and multi-layered strategy to ensure seamless payment processing. By minimising transaction processing downtime, retailers can create a more resilient and reliable payment system. This approach includes building resilience into every component of the transaction process, from the physical point-of-sale (POS) systems to the back-end payment processing infrastructure. The process of creating a resilient payment ecosystem requires investments in hardware, software, network redundancy, and emergency power solutions to keep payments flowing smoothly, even in the event of a disruption.

Key Strategies for Building Resilient Digital Payment Systems

Building resilience in payment systems requires a comprehensive approach. Here are some of the key strategies that retailers can employ to minimise disruptions and enhance payment processing reliability:

1. Ensuring High Availability at the Point of Sale (POS)

At the heart of every transaction is the Point of Sale (POS), which must remain operational and dependable. Businesses can achieve high availability by selecting POS models with components that have a proven record of reliability. Additionally, having POS terminals which can, for example, communicate through store networks and cellular data, provides a failsafe in case one network fails. Another consideration is to equip POS software with alternative transaction processing capabilities, ensuring that even if the primary system fails, transactions can still proceed.

Battery-powered wireless POS terminals add an additional layer of security, especially useful during power outages or when connectivity issues arise. These portable, self-powered terminals allow transactions to continue, providing a critical safeguard for customer service and sales continuity. In certain regions, like Europe, businesses are enhancing POS resilience by incorporating “Tap on Mobile” apps on existing in-store tablets or smartphones. This technology enables these devices to act as backup POS terminals, allowing enterprises to continue processing payments even if primary systems go down, reducing downtime and averting the need for lengthy repair times.

2. Strengthening Network Connectivity 

Network issues remain one of the primary causes of payment disruptions. As such, many businesses, particularly in the likes of the retail sector, are increasingly adopting dual network systems and contracting with multiple communication providers. This setup allows for the ability to switch networks seamlessly if one fails, minimising the risk of payment disruptions. While dedicated lines offer a higher level of reliability, they are often associated with increased costs, which businesses must weigh against potential benefits.

Power disruptions can also impact payment systems, especially in areas prone to power outages. This risk can be mitigated by installing Uninterrupted Power Supplies (UPS) and backup generators to maintain power for critical systems. By ensuring connectivity remains stable across every sales channel—such as traditional tills, to self-checkouts and mobile POS— a seamless payment experience can be maintained. This approach makes it possible to diversify communication methods, so that even if one fails, other payment options remain available to customers.

3. Leveraging Deferred Authorisation to Avoid Disruptions

In response to payment processing disruptions, some payment networks have introduced a deferred authorisation feature, allowing merchants to delay card authorisation for up to 24 hours in specific cases. This flexibility enables merchants to continue operations even if their payment processor encounters an issue. However, deferred authorisation does come with some risk, as transactions are not fully authorised at the time of purchase. Businesses willing to take on these risks may find deferred authorisation to be a useful tool in areas where offline PIN verification is prevalent or during short-term disruptions.

4. Implementing Resilient Gateway Processors

Gateway processors play an essential role in ensuring transaction continuity. Merchants must choose a Gateway that supports dual data centres and an active-active architecture, which enables redundancy and allows for automated transaction rerouting if a primary connection fails. An active-active setup ensures uninterrupted transaction processing by seamlessly shifting transactions to the secondary processing platform, minimising downtime.

Adding a payment orchestration layer further enhances resilience by improving transaction routing logic. This layer allows for smart routing and retry capabilities, which come into play if a transaction initially fails. With better routing and retry features, merchants can more effectively utilise multiple acquirers. Payment orchestration makes it easier to switch between acquirers, providing a smoother experience for customers and reducing the likelihood of payment interruptions.

5. Supporting Multiple Payment Methods for Added Resilience

To mitigate the risk of single-channel dependency, supporting multiple payment methods can prove invaluable. If one card network (e.g., Visa or Mastercard) experiences disruptions, retailers can offer alternative payment methods (APMs) like PayPal, digital wallets, or dynamic currency conversion (DCC) options, which are especially popular with international customers. This diversity ensures that even if the primary payment method is unavailable, customers can still complete transactions, so preserving sales and customer satisfaction.

In Europe, retailers are increasingly adopting Account-to-Account (A2A) payments and Open Banking options, which enable direct payments between customer and merchant accounts. This approach enhances resilience and provides a backup to traditional card payments, offering greater flexibility in the face of potential network issues.

Additional Measures to Enhance Payment Resilience

As regulations evolve, particularly in Europe, retailers must also consider compliance when designing their payment systems. New rules require customers to be authenticated as well as authorised during transactions, which adds complexity to the resilience equation. EMV 3DS protocols, a standard for authenticating digital payments, now include a “resilience indicator” to minimise transaction declines during unexpected disruptions. Merchants should ensure their payment processors support these updated protocols, as they provide an additional layer of resilience by preventing unnecessary declines.

In cases where digital payments are entirely unavailable, cash transactions can act as a crucial fallback. Although cash use is declining, having a backup option such as nearby ATMs or in-store cash dispensers (provided by independent providers) can help mitigate the impact of digital payment disruptions. By offering this traditional method as a last resort, some businesses, in particular retailers, can avoid lost sales, ensuring that customers can complete purchases even if digital options are momentarily down.

Strategic Resilience for a Digital Payment Future

Today, payment acceptance represents more than a simple transaction capability; it has become a critical service that underpins multi-faceted business operations and customer satisfaction. Building resilience into payment systems requires careful planning and substantial investment, but it is a necessary endeavour in the modern digital landscape. By implementing a comprehensive, multi-layered strategy that prioritises both reliability and flexibility, merchants can ensure a seamless and resilient payment experience, protecting both revenue and brand reputation.

The demands of the digital payment landscape call for robust solutions tailored to the specific needs of each transactional environment. Whether it’s redundancy in POS systems, backup connectivity options, or alternative payment methods, resilience in payment processing is key to ensuring smooth operations under any circumstances. Partnering with knowledgeable merchant service providers allows businesses to explore the full range of resilience options available, fortifying their payment systems and safeguarding their future.

Ultimately, by focusing on resilience, enterprises can embrace the digital payment shift with confidence, providing the seamless, uninterrupted service that today’s consumers expect and reinforcing their position in an increasingly competitive marketplace.


James Stark is Head of Direct Sales UK – Enterprise, Merchant Services, for Worldline. He is an experienced payments leader who has spent over 14 years within the payment industry in client focused roles. During his time with Worldline he has been playing a key role in supporting the company developing its retail business.

Photo by Meagan Carsience on Unsplash

Keep Up to Date with the Most Important News

By pressing the Subscribe button, you confirm that you have read and are agreeing to our Privacy Policy and Terms of Use
Add a comment Add a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Previous Post
customer experience

AI-Driven Solutions for Modern Customer Challenges

Next Post

Hightouch and Databricks to Launch Self-Service AI-powered Audience Management Solution for Offsite Retail Media Networks

Advertisement

Subscribe to Customerland

Customer Enlightenment Delivered Directly to You.

    Get the latest insights, tips, and technologies to help you build and protect your customer estate.