By Brandon Banks
In the business world, there’s nothing more certain than change. Today’s payment strategies must reflect and plan for these transformations. Whether you lead a small business or helm a global enterprise, it is essential to prepare your finances and operations for potential disruption by building redundancies into your payment strategy.
Having multiple backups in place ensures continuity and resilience in your payment processing operations even when the unexpected happens. It’s like an insurance policy that mitigates the risk of potential disruptions and keeps your business running smoothly.
Let’s dive deeper into this vital component and explore why having a fail-safe in your payment strategy is more of a necessity than a luxury.
The Rationale Behind Redundancy in Payment Processing
Let’s say you’re running a high-volume ecommerce business. Suddenly — on your peak shopping day — your payment gateway goes down and you are unable to accept payments for several hours. You’re looking at substantial revenue loss and potential damage to your brand’s reputation. Those few hours of downtime could easily lead to a significant business setback.
This is why redundancy is so crucial to your success. By having multiple backups or contingencies in place, you can prevent such catastrophes from bringing your operations to a halt. Payment processing is the lifeblood of your online business, and redundancies are its safeguards.
Five Areas to Consider Implementing Redundancy
Let’s delve deeper into the five areas where redundancy is key to maintaining an optimal payment strategy.
1. Payment Gateways
Gateway outages can occur due to various reasons such as technical glitches, cyber-attacks, system upgrades, or even natural disasters affecting data centers. When an outage occurs, your primary payment gateway becomes unusable. This can lead to lost sales, as customers will not be able to complete transactions.
If you operate in multiple countries or time zones, the losses can quickly multiply. But with a redundant system — where you have a secondary gateway configured — you can quickly reroute your online payments or card transactions. This ensures business continuity, preserving your revenue stream and customer trust.
2. Payment Processors
Payment processors are just as susceptible to outages as payment gateways. The reasons for these outages can be similar, ranging from technical faults to planned maintenance. If your payment processor goes down, you could be looking at a significant business disruption, especially if you don’t have a backup plan in place.
Additionally, your payment processors might decide to close your business’s bank account (i.e. merchant account) or stop supporting you due to changes in risk, regulatory compliance, market strategy, or even public pressure. In such scenarios, you could find yourself scrambling to find a new credit card processor, which often leads to hurried decisions and sub-optimal arrangements.
Having multiple payment processing relationships in place provides a safety net. It gives you the freedom and time to switch to an alternative processor when needed, rather than settling for the first available option. This minimizes the risk of revenue loss and sets you up for long-term success.
3. Declined Transactions
Transaction or payment declines can occur due to a multitude of reasons, including the following:
- Insufficient funds
- Expired credit or debit cards
- Incorrect credit or debit card details
- Suspected fraudulent activity
- Card issuer restrictions
- Technical issues
Each declined card transaction represents lost revenue. But with a well-thought-out redundancy strategy, you can automatically reroute such transactions through another payment path. This not only recovers potentially lost sales but also enhances your overall authorization rates, thereby boosting your bottom line.
4. Technology and Features
The payments landscape is rapidly evolving, with new technologies, payment types, and customer preferences emerging constantly. If your payment service provider cannot keep up with these changes, it can severely limit your growth and competitive edge. Having a redundant system in place, with different service providers bringing in their unique features and capabilities, ensures that you can meet the evolving demands of your business, customers, and markets.
5. Strategic Changes
At times, you may need to quickly pivot your strategy to exploit a new market opportunity, meet regulatory changes, or accommodate business growth. For instance, if you decide to expand to new markets or countries, you might need a payment processor that supports local payment methods or currencies.
If your business grows significantly, your current solution might not be able to handle the increased transaction volume or provide the necessary data and analytics. In such cases, having a redundant setup gives you the flexibility and agility to implement these changes smoothly and swiftly.
Building redundancy into your payment strategy provides numerous benefits. It safeguards your revenue, ensures business continuity, improves authorization rates, and provides flexibility in response to changing business, market, or regulatory conditions. Implementing redundancy in your payment processing will help ensure that your payment strategy is robust, flexible, ready to support your business growth and success in the long run.
Keep in mind that redundancy is not a set-and-forget solution. It requires ongoing management and optimization. Your redundancy strategy should be updated whenever your business requirements, market conditions, or industry regulations change.
Redundancy initiatives can be complex, so it’s important to research the best option for your business and work with a reliable partner like Nexio. Our payment experts will help you evaluate business needs, choose the right architecture and technologies, develop secure processes, setup redundancy features — all while ensuring compliance and high performance of payment transactions.
From implementing a robust single-instance strategy that moves towards multiple-instance backup solutions, we have the flexibility to support your redundancy initiatives now and in the future. Contact Nexio today to get started on building robustness and security into your payment strategy!