Consumers now prefer digital payment options, with cash usage declining in all major economies. Cards have become by far the most popular payment method, with contactless now accounting for most purchases made at retail stores. Furthermore, the number of people relying on digital wallets on their smartphones, rather than carrying a traditional purse containing cash, continues to rise.
These changes in consumer payment preferences and behaviors mean that accepting digital payments has become a mission-critical service for all retailers, as they may well be unable to trade if anything fails anywhere within the payment processing infrastructure. This is why enterprise merchants are increasingly focused on improving the levels of resilience to address connectivity problems, system issues, hardware failures, software bugs, cyberattacks or other limitations that could prevent successful transaction handling.
If a retailer is unable to accept a digital payment, the customer gets a dreadful user experience; it can result in revenue loss, customer dissatisfaction, damage to brand reputation and potentially regulatory intervention. That is why resilience is so crucial.
How to Increase Resilience?
A multilayered strategy should be taken to increase resilience and protect the business from any transaction processing downtime. This involves building resilience into each individual product and layer, while also considering it from an end-to-end perspective. Resilience is achieved by having multiple communication networks, dual acquirer processors, active-active data centers, smart transaction routing, payment orchestration and accepting alternative payment methods.
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Starting at the POS Acceptance Device
High availability starts by selecting POS models that have been manufactured to high-quality standards, incorporating reliable components and capable of communicating via both store telecommunication links and fast cellular data networks. Equally, the terminal app should have been designed to support alternative transaction processing flows. Battery-powered wireless payment terminals add an extra layer of resilience in the event of a power outage or wireless connectivity failure.
Introducing ‘Tap on Mobile’ Devices
A new way European merchants are enhancing resilience is by adding a secure ‘Tap on Mobile’ SoftPOS payment app to tablets and smartphones already deployed in-store. This provides a cost-effective back-up POS payment terminal, allowing payments to be accepted even if the main terminal is down, avoiding long wait times for an engineer visit or a replacement device. When well-designed, this new acceptance option can address multiple failure scenarios.
Store-Level Resilience
Connectivity issues are often the primary cause of processing failures. Higher resilience can be achieved by using dual networks and multiple communication providers. While dedicated lines deliver higher reliability, they come at a higher a cost. Uninterrupted Power Supplies (UPS) and generators are valuable for boosting resilience, especially if trading in locations that experience regular electricity power-cuts.
Each sales channel (till, self-checkout, queue-busting, customer service desk) can be designed to use different communication methods and processing paths, ensuring that a single failure won’t disable all in-store payment options.
Deferred Authorization
To address processing disruptions, the international payment networks have expanded the option to delay card authorization by up to 24 hours for more merchant category codes. This requires an indicator flag to be populated within the authorization message, but merchants must agree to accepting the increased risk of trading offline. Changes to operational procedures may be needed in countries where offline PIN verification is used.
Resilient Gateway Processor
Gateway processors have a critical role to play in ensuring uninterrupted transaction processing. This can be achieved through dual data centers operating in an active-active architecture with auto redundancy built in. Automated smart logic can route transactions to a secondary processor when needed.
Payments Orchestration
Adding a payment orchestration layer is another effective way to improve ecommerce payment processing resilience. This layer brings more sophisticated payment processing logic and enhanced smart routing and retry options. Payment orchestration simplifies the use of multiple acquirers as these links are always ready to receive transactions.
Alternative Payment Methods (APMs)
Customers have the ability to pay through a range of payment methods, so supporting alternative payment options adds greater resilience in the event of disruption to Visa/Mastercard card acceptance. APMs, including Dynamic Currency Conversion popular with international shoppers, can be processed by different processors or acquirers, providing an alternative processing route if the primary connection fails. European retailers are increasingly turning to Account-to-Account and Open Banking payment options as a way to increase resilience.
Strong Customer Authentication (SCA)
In Europe, customers must now be authenticated in addition to having their funds authorized thanks to new regulations. This requirement is spreading to other regions and countries. Most SCA issues come with ecommerce transactions, and that is why a new resilience flag (indicator) has been defined within the EMV 3DS protocols, to prevent transactions from being unnecessarily declined when an unexpected processing issue occurs. Retailers are encouraged to ensure their payment processor supports this resilience capability.
Cash as the Ultimate Fallback
If all digital payments are unavailable, cash acceptance remains the final option to prevent the sale being lost. Retailers should be aware of the locations of nearby ATMs, and some may want to consider contracting with an independent ATM deployer for a cash dispenser to be installed at their outlet.
Conclusion
Payments acceptance has become a mission-critical service for enterprise retailers and that is why greater attention is being paid to resilience. There are many ways to enhance payment acceptance resilience, but resilience does not just occur automatically, it needs to be considered at an architectural level and built in at every stage of the transaction processing flow. A multi layered, end-to-end approach is essential.
Retailers understand that a great customer experience must be provided 24 x 7 x 365 and that any failure will create revenue loss, customer dissatisfaction and damage to brand reputation. This is why more attention and investment in boosting resilience levels are required. Partnering with a merchant services provider that has the experience, know-how and product capabilities you need is crucial to ensuring your business is protected by maximum resilience options.
James Stark is Head of Direct Sales UK – Enterprise, Merchant Services at 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, drawing on the expertise he has gained throughout his career, he has been playing a key role in supporting the company developing its retail business – retail being one of the company’s key verticals.
