Payment Processor Down: A Merchant Playbook for Keeping Sales Moving

With a standard payment processor, you can expect 99.9% uptime. This works out to 43 minutes of downtime or less each month. However, top-tier payment processors experience just five minutes of downtime each year.

Even with the best processors, downtime can still happen. When a payment processor outage does occur, the costs can quickly add up. Besides reducing your earnings during the outage, they can also lower your ongoing revenue. Customers are less likely to make future purchases after a transaction fails, so repeated outages can impact your churn rate. 

If your payment processor is down, it pays to be proactive. The following tips can help you quickly respond to an existing outage and prevent a future one from impacting your business.

TL;DR

• A gateway or processor outage can immediately cause failed transactions and checkout errors. This increases the likelihood of abandoned checkouts and dissatisfied customers.
• By monitoring your payment metrics, you can detect outages before they escalate.
• An outage will typically look like a timeout or declined transaction, but the actual problem is with the processor.
• Running test transactions can help you ensure that your checkout and payment systems are functioning properly. 
• Setting up backup processors and gateways allows you to intelligently route transactions around the problem.
• Backup payments, like digital wallets, ACH, and invoicing, are great ways to keep bringing in revenue during an outage.
• To prevent confusion and dissatisfied clients, it is important to communicate proactively with your customers.
• Following the outage, reconciliation must be handled with care to ensure accurate refunds and prevent duplicate transactions. 
• To avoid problems with single points of failure in the future, merchants should implement redundancies.

What Happens When a Payment Processor Goes Down? 

When a payment processor or its acquiring connection experiences an outage, it can immediately impact your operations. Customers become unable to complete their payments, which can lead to customer churn and lost revenue. This type of revenue leakage is especially problematic for subscription businesses because clients may cancel their subscriptions.

Processor outages can occur for a range of different reasons. Hardware failures, natural disasters, network connectivity issues, and cyberattacks can all cause processors to go offline temporarily.

As soon as the failure occurs, a few things happen behind the scenes. Payment authorizations start to fail, leading to timeout errors and declined transactions. Checkout sessions can start to crash, which causes added friction and spikes in cart abandonment. 

Due to the checkout friction, your customer support team will likely have to handle more client complaints. Transactions that were processed right before the failure may have an unclear status, making it harder to reconcile transactions once the outage is complete. 

For all of these reasons, having a payment processor down can lead to immediate declines in your revenue and long-term damage to customer trust. Fortunately, you can mitigate the damage by detecting the outage quickly and responding effectively.

How To Detect a Processor Outage Quickly 

As a business owner, there are a few things you can do to detect a processor outage quickly so that you can respond and minimize any associated damage. 

Monitor Your Metrics

The first step is to monitor your payment metrics, such as the authorization approval rate, timeout frequency, gateway response latency, and payment error rate. If any of these metrics change significantly in a short period of time, there is likely an issue with your payment infrastructure. Repeatedly seeing the same error codes, such as gateway timeout or internal server errors, signals that there is a processor-related issue.

Run Test Transactions

Another way to detect outages is to periodically run test transactions. For example, you can use simulated tests to see how the processor API responds, how your checkout page loads, and whether transactions are authorized successfully. If any of these checks fail, there is something wrong with your payment infrastructure.

Pay Attention to Support Tickets

In some cases, the first major sign of a problem is customer complaints. You may experience sudden jumps in customer tickets due to “card declined” errors, incomplete checkout processes, or network timeouts. Similarly, an unexplained increase in checkout abandonment may indicate a processor or gateway issue.

Gateway vs. Platform Outages: What Is the Difference? 

The fundamental difference between these two issues is that a gateway outage interrupts the transmission of payment data. In comparison, platform outages impact how transactions are authorized and processed. 

With a gateway outage, the system that is supposed to communicate data between the processor, merchant, and card networks stops working the way it is supposed to. You may notice API requests timing out, error messages during tokenization, and transactions that aren’t submitted for authorization. This issue often stems from software problems, API service disruptions, network connectivity problems, server overload, or infrastructure-related problems.

Meanwhile, a platform outage impacts the entire processing platform. The gateway can still work, but transactions cannot be processed because the platform’s backend systems won’t work. This often means that authorization requests return with errors, settlements fail to update, declined transactions increase, and payment confirmations become delayed. Platform outages can occur because of data center outages, processing system failures, and disruptions to the processor’s internal infrastructure.

This distinction matters because it determines how you respond to the problem. As a merchant, you need to route through a different gateway if your gateway is down. When the processor platform is the issue, you should use a different processor or acquirer in order to keep processing transactions.

How To Respond to Unexpected Outages

In 2018, a major Visa outage in Europe led to 5 million failed transactions over a 10-hour period. Similar outages occurred in the United States with Square in 2023 and Fiserv in 2021. 

As a merchant, you can’t control when a processor outage occurs. Your best option is to make sure your payment orchestration is ready. A clear response plan can help you reduce downtime, route around failures, and protect your company’s revenue stream.

Route Around Processor and Gateway Failures

The first goal is to determine if the problem is related to the gateway or the processor. Once you know where the issue is occurring, you can route transactions to a different gateway, processor, or acquirer. By responding quickly and rerouting transactions, you can prevent the outage from impacting all of your customers.

Switch to Backup Processing or Alternative Methods

If you are unable to reroute transactions, you can use backup payment options instead. The following are a few of the most common alternatives.

• Digital wallets, like Apple Pay, PayPal, or Google Pay
• Invoice clients or send payment links so that customers can pay later
• ACH or bank transfers
• Manual card entry for high-value transactions

Communicate With Customers

No matter what backup plan you use, you need to communicate it proactively. Customers can quickly become frustrated when they encounter payment errors. As a business owner, your communication approach is essential to maintaining trust and reducing the number of customer support tickets you receive.

Your checkout page, social media, and status pages should contain an update about the payment system issue. If there are alternative ways to pay, include information about what customers can do instead. You should also give your customer support team a script for handling questions.

Cleanly Reconcile Transactions After Service Resumes

Once service resumes, you need to be careful about how you reconcile transactions. Depending on how many times failed transactions were attempted, there could be duplicate charges and authorizations. You’ll need to match payments to the correct order, retry declined transactions, and issue refunds as needed. It’s also a good idea to perform a post-incident analysis to find ways you can improve in the future.

What To Do When a Payment Processor Outage Occurs: A Quick Checklist

If your payment gateway or payment processor is down, there are a few steps you can take to mitigate the harm and get your system running again. To help, we’ve compiled a short checklist of things to do.

• Confirm the Outage: First, confirm that the outage exists by checking the processor status pages and any of your internal monitoring tools. 
• Use Backup Options: Activate an alternative payment processor or gateway if it is available. You may also use offline payment mode or manual authorization capture.
• Notify Your Employees: Let your teams know about the payment processor outage.
• Pause Retries: Pause retry loops so that you don’t inadvertently cause duplicate transactions when your payment processor is operational again.
• Communicate With Customers: Create a customer support script that team members can use to talk about the outage with customers. Besides sending an email to affected customers, you can create a banner for your checkout page or social media page to notify customers about prolonged outages.
• Stagger Retries: Once the system is back online, remember to stagger retries in batches so that you don’t overwhelm the system. You should prioritize high-value and time-sensitive transactions first.
• Review Failed Transactions: Once the outage event is over, review which payments need to be retried. As a part of your reconciliation process, you should make sure each payment corresponds to a fulfilled order.
• Look for Duplicates: Verify that none of your transactions were charged more than once.
• Handle Customer Complaints: If there are any refunds or failed transactions, you should resolve the problem and communicate the resolution with the customer.
• Document the Incident: Carefully track the timeline of the incident and the impact. This information can be used to prepare for and prevent future processing issues.

How To Prevent Complications During Future Processor Outages

No payment processor can guarantee 100% uptime, so merchants need to be proactive. By designing redundancies, backup routing options, and other safeguards, you can make sure your company remains fully operational during any payment processor outage.

Create Payment Redundancies

The first step is ensuring that your payment stack contains multiple redundancies. A single point of failure can take your entire operation offline. 

The type of redundancy depends on your current needs. For example, a secondary processor or gateway integration is a good option if your primary payment processor fails. Incorporating multiple payment methods and creating geographic redundancies are essential steps for keeping your business operational during an outage. Additionally, using offline authorization capture is a good way to collect payments when your processor is down.

Implement Payment Monitoring

Often, merchants only realize that a credit card outage has occurred after customers start to complain. By adopting real-time monitoring systems, you can detect problems faster. Your payment system should feature success-rate tracking, processor status monitoring, and automated alerts. You should also regularly perform automated test transactions to verify the functionality of your payment flow.

Use Failover Routing 

With failover routing, you can reroute payments to a different source when your primary option isn’t working properly. This type of smart payment routing involves rerouting transactions automatically if the primary processor isn’t available or if authorization rates suddenly drop. Routing decisions are based on each processor’s success rates, which is why this approach can improve overall authorization rates. Additionally, loads can be balanced across multiple processors during peak time periods.

When a failure occurs, smart routing helps you recuperate any losses. The failed transaction is sent through an alternate gateway, increasing the likelihood of success.

Clarify Incident Contacts

If something does go wrong, you need to have a designated point person who can respond quickly. Name an incident contact with your payment processor or gateway, and make sure the person is aware of what to do in the event of an outage. Additionally, you should create a defined escalation path for ongoing issues and set up internal communication protocols so that your team can work together during an outage. 

Review Service Level Agreements (SLA)

SLAs are provided by the processor. They include important information about uptime expectations, response times, incident resolution, and transparent reporting. If any compensation is provided for downtime, it will be listed in your SLA. By carefully reading through this document, you can make sure you know what to expect before, during, and after an incident.

How PayCompass Helps Merchants Create Resilient Payment Setups

When a payment processor is down, it can immediately impact your revenue stream and overall customer experience. By partnering with PayCompass, you can build a more resilient payment setup. Our team can reduce your single points of failure by providing multiple gateway and processing options.

From flexible payment support to intelligent routing, we can help you maximize uptime. Our real-time monitoring tools help you detect outages quickly and respond before they impact your performance. Plus, setting up multiple processors creates additional redundancies in your system, preventing unexpected outages from impacting your clients.

Final Thoughts

While payment processor outages are thankfully rare, they do happen. To avoid lost revenue and damaged customer relationships, it’s important to be proactive about preparing for potential downtime. 

Using multiple processors and gateways ensures that you can route transactions around the problem. Plus, real-time monitoring means you can detect outages as they happen. From clear communication to implementing backup payment methods, there are a few key steps you can take to ensure your operations continue when a payment processor is down.

To learn more about preventing and responding to outages, reach out to the payment experts at PayCompass today.