As if the pandemic hadn’t presented enough challenges for both businesses and the payments industry, the recent outages following the issues at Wirecard have created another unscheduled set of problems to overcome, which have this time stretched technical teams to their limit.
For those of you who may not be fully aware of the situation, as a result of the £1.7bn alleged accounting fraud at Wirecard, companies that relied on their technology to process payments, including a number of UK fintech firms like Pockit, Anna Money and Curve, saw their payments being frozen. As a result and at a critical time for hard-hit retailers, some businesses have not been able to take payments, and therefore risk going to the wall. Similarly, consumers were unable to use their cards or withdraw their own money.
There were some Herculean efforts made by technical teams across the board to get things back up and running as quickly as possible, which have been well documented via corporate blogs and social media posts. But it shouldn’t have to be this way. Hard-pressed teams shouldn’t have to pull “all-nighters” and give up their weekend to keep critical ecommerce and payments services running. If businesses had a back-up option, rather than relying on one single bank for their payments, this wouldn’t be needed.
Wirecard’s downfall may seem like a “once in a decade” outage, but it brings the systemic risks that businesses and consumers are subject to, by being reliant on one acquiring bank for all of their payment processing, very sharply into focus. Acquirer outages happen – and they affect established players and new market entrants alike. And, more importantly, they impact the retailers and merchants they support, and their customers too.
So what can businesses do to protect themselves so that they can trade with confidence, and ensure that consumers can access their money and make payments, always?
Putting it simply – companies need a failover. If a business is using one bank exclusively, they need to look again at their partner arrangements. Whilst companies like Elavon may offer pan-European reach, or Barclaycard has the credibility of being backed by a British institution, if businesses are reliant on only one of these, they would be wise to branch out and adopt a failover. Any company that has a single banking connection will face similar challenges if their banks go down, whatever the cause.
The answer for merchants who are currently reliant on a single bank lies in multi acquiring. In the past, it was only enterprise businesses that had the resources to multi acquire. I imagine Tesco are not relying solely on WorldPay for their online acquiring. Amazon and Facebook use a number of banking partners. As they transact globally, 24/7, these businesses can’t afford to stop accepting payments.
Multi (or dual) acquiring has traditionally been a manual process, requiring multiple contracts, with different banks, across many different markets. And there have previously been significant technical hurdles and complex APIs that come with having a failover. The Facebooks and Amazons of this world can afford the expense, but what about companies with limited payments knowledge who want to hand over payments responsibilities to one, trusted, global bank.
Now, businesses can easily access a truly global banking network. by working with one multi acquiring payment processing partner. By connecting to a number of different banks, payments can be redirected with the flip of an API-enabled switch. This provides multiple payments options and constant protection with multiple failovers as the business is supported across multiple banks.
I’d always thought it was the case that the biggest benefit to businesses that have access to large global banking networks, was the ability for them to intelligently route payments to get the highest conversion rate and drive higher revenue. Following the Wirecard issues, I now reflect that the biggest benefit for merchants is the ability to have not just one, but multiple back-ups.
High authorisation rates are meaningless if you can’t take payments in the first place. And we will not be able to face the challenges that the post-pandemic economy will present us with if we can’t trade with the confidence that we will always be able to take payments from our customers. It’s time for businesses to embrace the benefits of multi acquiring.
- Nikhita Hyett, MD, Europe, BlueSnap