Our recent EFTPOS Retailer Survey highlights the critical concern for Australian retailers, which resulted in many questions for me from retailers over this survey: When choosing payment solutions, retailers here gave reliability as their top priority, surpassing fast clearance and cost. While fast clearance remains the next most important, uninterrupted payment processing is essential for business continuity.

Payment processing reliability is not just a convenience; it's vital for business continuity. Yet our survey indicates that retailers frequently experience outages and pose a persistent risk. These outages would result in significant financial losses for retailers.

What hurts is that almost all IT infrastructure guarantees an uptime of 99.999% (we call this the five nines), yet no one sees it. A shop, let us say, open 8 hours a day, 300 days a year, would, based on this, have less than 1.5 minutes of an EFTPOS outage a year. I am sure we all have gone through more than 1.5 minutes of an EFTPOS outage.

Incidents involving Telstra and Woolworths demonstrate that even major businesses are not immune to payment outages.

For example, a retailer with $1 million in annual turnover and a 30% margin loses approximately $400 in revenue for every hour of downtime. This figure only reflects immediate losses. Long-term impacts such as damaged customer relationships, reputational harm, and customer attrition will be even more significant, though harder to quantify.

Under Australian Consumer Law, businesses may be entitled to compensation for financial losses caused by EFTPOS outages, even if the provider does not guarantee uptime. To make a successful claim,  it will take time as you need to document all losses thoroughly, then you will need to include POS reports comparing affected periods to normal trading to show the loss. I have seen a few people do this, with mixed results. We generally advise that if the EFTPOS provider makes a fair offer, accept it. One problem is that the EFTPOS providers know your figures as well as you do and have more money and experience in these matters.

Calculate the Cost of an EFTPOS Outage

Several direct and indirect factors determine the actual cost of an EFTPOS outage. The following outlines some key variables to help you estimate your potential losses.

Calculation

Average hourly revenue

An outage can occur anytime; take your yearly revenue and work out an hourly rate.

I should say here that Murphy's Law will tell you that outages will occur at the worst possible times, such as during peak trading hours, amplifying their financial and reputational impact.

Outage duration

This is hard to estimate, as customers have been knocked out for minutes, hours, and days. Do your best here. 

This one really hurts. Often, you use the downtime to do your books, and you see money going out, while your staff is doing nothing.

Card transaction percentage

Your End-of-Day reports will tell you this, I would expect somewhere between 50% and 80%

Estimated sales lost

Many customers carry little or no cash, and if EFTPOS is down, they cannot buy from you. Many will go elsewhere to buy the product. As a guess, I would say 50%, but I would not be surprised if it's closer to 100%.

Now multiply these out.

(Lost revenue) = (Average hourly revenue) x (Outage duration) x (Card transaction percentage) x (Estimated sales lost)

That is the easy part now, we need to add to this base figure.

Customer Reputational Behaviour    

What do the customers think of you? If they cannot buy from you, they will buy from someone else. What chance is that they will switch for good? It is said that if an outage occurs once, it is generally okay, but two or three is something else. What is the cost of losing ten customers a year to EFTPOS outages?

I have seen industry experts give figure 

Key Takeaway

The actual cost of an EFTPOS outage extends far beyond immediate lost sales. Reliability is the foundation of trust and operational continuity in retail. Both providers and retailers must prioritise robust systems and contingency plans to safeguard business performance and customer relationships. 

As Australia moves into a cashless society, our present government (both sides) will only make this problem worse by not putting more commitment into our electronic infrastructure.

Have you ever wondered what would happen if your system suddenly stopped? During the recent CrowdStrike outage, millions of retailers experienced this. They entered their shop, only to find their computers frozen and no-one of taking in eftpos. It's enough to make any business owner break out in a cold sweat as he looks at all the staff just sitting around.

The CrowdStrike Outage: A Global Crisis

Last week, the retail world was rocked by what experts call the most significant computer outage. It had a global impact, affecting businesses everywhere.

The Scope of the Problem

• Duration: For many, this outage lasted a few days. The day after, I took a picture of a supermarket checkout at my local supermarket.

• Geographical Reach: Businesses from Australia to Europe and North America reported issues.

This unprecedented event highlighted the critical need for robust POS system backups and comprehensive business continuity planning.

The Impact on Retailers

A Digital Domino Effect

The CrowdStrike outage wasn't just a minor inconvenience. For many retailers, it was like someone had pulled the plug on their entire operation. Here's what we saw:

• Computer Chaos: Many retailers' computers stopped working, and suddenly, people were manual.
• Manual Mode Activated: Shops had to dust off their old-school methods and operate manually, highlighting the importance of maintaining manual operational skills.
• Payment Pandemonium: Electronic payment disruption was widespread. For many stores, it was cash or nothing, underscoring the ongoing importance of cash transactions in our increasingly digital world.

  

Brick-and-Mortar Business Resilience Tested

This crisis put the spotlight on brick-and-mortar business resilience. Stores that had prepared for such scenarios fared better, while others struggled to maintain even basic operations. It became clear that in the face of retail technology failure, having a solid backup plan is not just advisable - it's essential.

Our Experience

Interestingly, none of our clients seemed affected by this widespread issue. We were ready, armed with fixes and procedures, but no one called. It was a bit like preparing for a party, getting dressed up and not going—frustrating, to say the least!

We even initiated a ring at a few sites we thought might be in trouble, but they were all fine.

Lessons Learned

The Golden Rule of Updates

I was gobsmacked to learn that many affected sites had broken the cardinal rule of IT: Never do an update on a Friday. It's like tempting fate just before the weekend! This incident is a stark reminder of the importance of timing in system maintenance and updates.

Insurance Implications

Those impacted should definitely touch base with their insurance providers. Your policy might just cover such tech-related interruptions.

Cash is Still King (Sometimes)

Meanwhile, this shows that we cannot yet get rid of cash. We are not yet equipped for a cashless society. Never undervalue the role of cash today!

Preparing for Future Outages

Create a Backup Plan

1. Develop offline procedures for critical operations
2. Train staff on manual processes
3. Keep physical copies of important information
4. Regularly test and update your retail tech disaster recovery plan

Build Resilience

• Diversify payment options: Don't put all your eggs in one digital basket
• Maintain offline capabilities: Keep those old-school skills sharp
• Stay informed: Keep an eye on tech news and potential threats
• Invest in reliable POS systems: Choose solutions with robust backup features and offline capabilities

Conclusion

This massive outage exposed our vulnerability to tech failures. As retailers need to stay alert and flexible. Learning and developing comprehensive backup strategies will help your stores weather future tech storms.
Smart retail isn't just about the shiniest new systems – it's about being prepared for system failures. Heed the warnings from this worldwide tech meltdown and shield your business from upcoming digital challenges.

Here is yesterday's graph of the NBN internet reliability, today I bet it will not look much prettier. Not good if you consider that an internet connection is essential today. Yet, the reality today is that despite so many internet claims, outages are a regular occurrence.

Facing this unlike so many other POS systems, we do offer a local mode.

- This means that you can accept EFTPOS payments while the internet is down.

- You can operate your POS system almost as usual until the internet is back up.

What happens is that your data will be stored locally, then it will be automatically synced when the internet is back on without any user interaction.

So with our POS System, unlike so many others, you don't have to worry about losing your internet connection.