UK payment outages cost retail, hospitality GBP £1.6 billion

A recent study has estimated that payment system failures are costing UK retail and hospitality businesses GBP £1.6 billion each year.

The research, carried out by FreedomPay and Dynatrace in collaboration with Retail Economics, provides insight into the frequency and impact of payment disruptions and their repercussions for both businesses and consumers.

The findings reveal that on average, businesses in the UK experience over five major payment system outages a year. Of these incidents, 61% occur during peak trading periods when the potential for lost revenue is highest.

Consumer tolerance

The study explores consumer patience with payment disruptions, finding that most customers will tolerate only up to six minutes of waiting before becoming frustrated. The average outage, however, lasts 84 minutes, significantly exceeding this patience threshold. The research indicates that 22 minutes is the absolute limit most consumers will accept before abandoning a transaction altogether.

The report points out a disconnect between businesses' perceptions and actual consumer behaviour. Retail and hospitality businesses tend to overestimate customer patience, believing it extends to 32 minutes – a figure 10 minutes longer than customers' real tolerance.

This misjudgement can result in unnecessary customer loss and additional financial impact, as noted in the research.

Financial loss estimates

The cost of payment outages accumulates rapidly. The analysis indicates that during the seventh to eleventh minute of an outage, businesses stand to lose GBP £73 million in sales for each minute the system is down. With consumers less likely to wait beyond 22 minutes, by that point total losses could reach GBP £1.17 billion, equivalent to 74% of total revenue at risk during a serious incident.

Higher-income customers, who tend to visit physical stores and hospitality venues more often and rely more heavily on digital payments, are particularly affected by such incidents, according to the study.

Backup system gaps

The report also finds that a significant number of businesses lack sufficient contingency planning. 22% of businesses report having no backup method except cash, and 7% have no fallback at all should digital payment systems fail. At the same time, research indicates that less than 30% of consumers always carry cash, with the average amount carried being GBP £35 – lower than the average in-store spend of GBP £47.

One in five businesses admit to having no secure digital backup system, raising the risk of revenue losses during unplanned outages. This leaves organisations exposed to customer attrition at times of disruption.

Industry perspectives

Chris Kronenthal, President, FreedomPay, commented on the growing challenges:

Consumer-facing businesses are operating in increasingly unpredictable conditions. From extreme weather and power failures to cyber-attacks and system outages, disruption is no longer the exception, it's becoming the norm. The lack of planning by businesses, coupled with the fragility of existing infrastructure, is creating a perfect storm for revenue loss and reputational damage.

Alois Reitbauer, Chief Technology Strategist at Dynatrace, highlighted the significance of resilience:

Payment resilience isn't just an IT issue, it's a critical business capability. Outages don't just stop transactions; they break the customer journey and disrupt essential services. To stay resilient, businesses need real-time visibility, the agility to adapt in real time, and technologies that auto prevent and auto remediate disruptions. In a world where disruptions are inevitable, speed and insights are a business's most valuable safeguards.

Richard Lim, CEO of Retail Economics, reflected on the broader business implications:

In today's hyper-competitive landscape, seamless payment experiences are non-negotiable. Our research underscores the critical need for retailers and hospitality businesses to prioritise payment resilience. The financial impact of outages is significant, but the erosion of customer trust and brand loyalty can cause long term damage. Investing in robust, fail-safe payment infrastructure isn't just about mitigating risk; it's about safeguarding future growth and maintaining a competitive edge.

Industry reliance on digital payments

The study makes clear that reliance on mobile and card payments is continuing to rise among UK consumers. Cash as a method of payment is diminishing in favour, with the majority of customers opting not to carry it regularly. This places added pressure on businesses to maintain robust digital payment infrastructure, minimise outages and protect revenue streams.