Outages are inevitable in the financial services space. The complexity and rapidly evolving nature of payments ecosystems, not to mention the technology that powers them, means that errors can occur unexpectedly for any reason.
The financial impact of a payment outage, and the resulting downtime could mean revenue losses of between thousands – and millions of dollars.
In this blog I’ve outlined the disastrous effects of how even minutes of downtime can negatively affect your financial services business – from the financial implications, to lost customers and reputational damage.
It could happen to your business
Let’s look at an example for one bank. The scenario could apply to any payments business – including yours.
A hardware malfunction causes an outage that remains undetected for over 30 minutes, then takes a further three hours to resolve – with a total downtime of 210 minutes.
Direct revenue loss
If your financial institution processes 100 transactions per second, with an average transaction size of $91, and an average Merchant Fee of 2.0%, it results in a staggering $2.3 million in lost revenue during this outage.
Loss of new customers (and new revenue)
When faced with an outage, even a temporary disruption in your services can result in significant reputational damage.
The negative impact can quickly spread through word-of-mouth, social media, and news outlets, tarnishing your company's reputation, and eroding market trust in your services by potential customers.
Negative publicity can also result in higher merchant acquisition cost from a longer sales cycle due to the additional consultation required to explain and placate prospects.
Often, system uptime and performance metrics are requested by Procurement teams during a Request for Proposal (RFP) exercise which can negatively impact the response and securing the deal.
Loss of existing customers (and current revenue)
With this lost trust comes the potential for lost customers. If an outage persists or if customers experience significant financial inconveniences or losses as a result, dissatisfaction escalates rapidly.
Customers heavily rely on seamless payment processing, and a prolonged outage could lead to frustration, loss of confidence, and a desire to seek alternative options or switch banks.
The potential loss of customers can vary, making it crucial for your business to prioritize rapid response in identifying issues, efficient resolution, and effective communication to mitigate customer attrition and maintain trust.
Even if the relationship isn’t totally severed, discounting on processing fees and compensation for your customer’s lost business erodes current revenue streams.
The importance of real time transaction monitoring with IR Transact
No other industry is as complex as today’s payments industry, so it’s crucial to monitor your entire payments ecosystem in real time. Without stringent monitoring financial institutions are open to frequent payment failure, resulting in crippling downtime.
At IR, we simplify the complexity of managing modern payments ecosystems, uncovering unparalleled insights and turning data into intelligence to help you optimize your business, and dramatically reduce downtime.
With our payment monitoring solution, IR Transact, we manage 600 million transactions daily. With specifically programmed alerts in place, our customers report that they experience a significant improvement in problem detection and resolution time.
IR Transact can give you robust visibility into the performance of your core processing systems, revealing the instant there is a problem, where it is, and why it happened.
To discover how Transact can revolutionize your business in the face of ever evolving challenges, book a demo today and find out how our solution simplifies the complexity of managing your payments environment, helping deliver seamless operations and peace of mind.