Dive Brief:

• Payment system disruptions cost $44.4 billion in U.S. retail and hospitality sales each year, estimates a new study conducted by digital analytics firm Dynatrace, payments orchestration company FreedomPay and market research firm Retail Economics.
• Nearly two-thirds of those disruptions happen during peak hours. The average outage lasts for two hours, but consumers tend to wait seven minutes before abandoning a purchase, the study found.
• U.S. businesses lose $1.2 billion in sales per minute between eight and 13 minutes of an outage. After 23 minutes, companies can lose $5.3 billion, roughly 70% of vulnerable revenue, according to the study.

Dive Insight:

The study offers some insight into the retail and hospitality industries’ preparedness for payment outages. It’s based on two surveys, one with 5,000 consumers and another with 200 managers, as well as economic models and an analysis of outage patterns.

While the majority of retail and hospitality businesses have a secure backup system for payment failures, 15% lack one. 

More than half (56%) have offline card processing that allows them to keep accepting cards during outages; 51% offer mobile options such as QR codes or app-based checkouts; and 44% have secondary internet connections, the report said. 

The study’s findings also suggest that consumers aren’t always patient enough to hunt for ATMs during in-store payment outages. While a third of consumers said they are “very likely” to find a nearby ATM during a payment outage and return with cash to complete a purchase, four in ten said they only would be “likely” to do so, while 28% said they wouldn’t be likely to do so, according to the study. 

“Consumer-facing businesses in the U.S. are navigating an increasingly treacherous landscape,” FreedomPay President Chris Kronenthal said in a press release regarding the report. “From widespread outages and connectivity issues to the fragility of existing payment infrastructure, disruption has become a constant.”

FreedomPay has previously studied the impact of poor payment experiences on sales.

In September, it partnered with Stripe to survey 250 global financial services executives. Nearly six in ten respondents said their current payment technology has resulted in lost sales and higher cart abandonment rates, and about the same percentage blamed their outdated payment technology for exposing their companies to a competitive disadvantage.