How to Manage Customers and Handle Payments When Credit Card Machines are Down
As the pandemic continues to ebb, credit cards continue to play a key role in the global economic recovery. Business Wire states that the worldwide credit card market is projected to expand from $100.05 billion in 2020 to $103.06 billion in 2021. This figure translates into a 3% compound annual growth rate (or CAGR).
Diverse retailers, service contractors, restaurants, gas stations, and other businesses rely heavily on credit card revenues. On an average business day, mega-retailers such as Amazon process thousands of credit card sales. Restaurants bring in hefty card revenues for Saturday night dinners and Sunday brunches.
Most of the time, well-structured credit card processing systems effortlessly run in the background. However, there have been two notable outages recently that have affected entire countries and even multiple regions.
The United States credit card outage: February 26, 2021
On February 26, 2021, thousands of American customers found themselves severely inconvenienced as credit card payment systems crashed. Well-known retailers including IKEA and Forever 21, along with smaller chains and single-location stores, experienced negative impacts.
Fine-dining and fast-food restaurants nationwide also reported widespread credit card transaction failures. Fast-food outlets such as McDonald’s, Popeyes, and Chick-fil-A were affected. Customers in line were suddenly forced to find other ways to pay for their meals as credit card machines were down. Chick-fil-A reportedly distributed free meals to frustrated (and hungry) customers.
Other affected entities included car washes and Miami International Airport’s taxi-based payment machines. At the New Jersey Motor Vehicle Commission, motorists were unable to pay for vehicle-related services via credit cards. At thousands of businesses across the United States, customers were forced to pay by cash or go home empty-handed.
Two major card brands impacted
Downdetector, a recognized online outage tracking firm, noted that Visa and Mastercard problems began around 11 am EST. By 8 pm that day, most of the issues had been resolved.
For their part, Visa and Mastercard viewed the outages differently in public statements. Visa acknowledged the service disruption but said the problem was caused by a third-party service provider. In contrast, a Mastercard spokesperson stated that the company was operating normally that day.
Source of the payment systems outages
In reference to the large-scale outage, leading payments processor Fiserv issued a statement to Business Insider. “Some Fiserv services that rely on internet connectivity were interrupted. The majority have been restored and we are fully focused on restoring the remainder,” the company reported. However, Fiserv declined to name the third-party internet service provider at the core of the outage.
The European Visa outage: June 1, 2018
On June 1, 2018, countless UK and European businesses were impacted by the failure of their Visa chip and PIN transactions. In fact, over half of the entire region’s Visa card transactions were unsuccessful.
Customers accustomed to completing their card transactions within seconds were now forced to find an alternative payment method, a time-consuming and frustrating exercise. With a lack of details from financial institutions, customers turned to social media to express their displeasure.
Interestingly, customers could still make Visa cash withdrawals. Mastercard and American Express transactions were not affected by the outage, which lasted slightly more than five hours.
Afterward, Visa stressed that the widespread outage had resulted from a “hardware failure.” The company stated that the system malfunction had not stemmed from “unauthorized access or malicious event.”
4 reasons for a credit card machine outage
As a small business owner, the first step toward being prepared for card outages is to understand the causes. A credit card machine outage has four potential causes.
- First, a storewide power outage means the retailer’s electronic point-of-sale (or POS) system stops working entirely. Without a manual card imprinter, the business cannot process cardholders’ Visa, Visa debit, or Mastercard transactions. American Express and Discover transactions are also affected.
- Next, assume the POS system is working normally. The customer may have swiped their card backward or upside down. As a result, the card’s magnetic stripe does not interact with the card reader at the checkout station.
- Next, the credit card terminal’s magnetic stripe reader may have become damaged. Therefore, the terminal cannot accurately read customers’ card data.
- Finally, the card’s magnetic stripe may simply be worn out, leaving its data unreadable. It’s also possible that the customer has swiped a counterfeit or modified card.
Any of these occurrences mean that the POS system or card terminal cannot take credit card payments. The system cannot accept debit cards or gift cards, and customers cannot make cash withdrawals.
A 5-step action plan for credit card machine outages
If credit card machines are down, you need a plan to manage customers and payments, or else the situation may quickly get out of hand.
To develop a 5-step credit card machine outage action plan, consider how previous outages impacted your operations and your customers. Then, take steps to proactively address these issues. Review the finished plan with your store associates before an incident occurs.
1. Identify the problem
Pinpoint the source of the problem. Determine whether you’re faced with a storewide power outage or an internet shutdown. If neither of these factors is in play, the card machine may be the culprit.
To get details on the outage, contact your payment processing company. If possible, call their customer support line. View their social media pages for trending topics, and scan their website for the latest news. If you are unable to reach your payment processor, ask other merchants about the problem’s origin.
2. Organize your team members
Give each store associate a specific task. Ensure that each person understands exactly what is required of them.
For example, one team member contacts your service provider and submits problem reports. Another associate manually records customer transaction data. A third employee provides upbeat personal service so customers can complete their business as quickly as possible.
3. Explore alternative payment options
Currently, you cannot process magnetic stripe-based card transactions. However, your payment provider may still be able to accept contactless payments. In addition, you might be able to handle credit card processing via an online portal or mobile card reader. Ensure that you have these alternative capabilities in place.
Manual card imprinter
If your electronic payment system is completely non-functional, turn to an old-fashioned card imprinter. These rugged devices use rollers and ink to imprint a customer’s card number and card information on a special form. The store associate also writes down the other transaction details. Once the POS system is operational, the associate enters each account number and transaction data into the card terminal.
4. Communicate with your customers
Proactively communicate the outage situation to your customers. Post a window sign, and create targeted social media posts. Follow up with relevant notifications when you receive them. If possible, direct customers to nearby ATM machines so they can pay for purchases with cash.
Although updating customers will take some effort, view it as key to the relationship-building process. When your customers view your company as a trusted source, this increases customer loyalty and can help to generate referral business.
5. Stay alert for cybercrime signals
Remain vigilant for signs of a potential cybercrime issue. Someone may supposedly contact you from a bank, payment processor, or card company. You may receive a phone call or a “phishing” email that resembles an authentic message from your provider.
To avoid compromising your business’ or customers’ security, do not give out any information. Instead, contact the institution or provider for verification of the request. Ask customers to monitor their bank statements as well.
Flag suspicious-looking transactions
While staying aware of cybercrime risks, know that opportunistic criminals are always working to commit credit card fraud. If you operate a retail or wholesale business, watch for five types of suspicious purchasing behavior:
- Very large internet-based orders without any customer contact
- Rush requests for high-priced products or large quantities of items
- Orders shipped to foreign countries
- Billing addresses that do not sync with on-file card information
- Customer’s refusal to provide the CVV verification code or daytime phone
The presence of one factor does not necessarily mean that any credit card fraud is occurring. If multiple factors are in play, however, take these three investigative steps. If you cannot confirm that the transaction is legitimate, do not ship the merchandise.
- Obtain the cardholder’s complete name, address, phone number, and card CVV number.
- Verify the cardholder’s billing address. Contact the merchant bank or address verification system to confirm the address matches their database. If not, do not ship the goods.
- Find a reason to call the customer using the provided phone number. Request to speak to the cardholder. If you cannot reach them, do not process the order.
Choose a security-conscious payment processor
Working with a security-focused payment processing company is important. Payment Depot is 100% PCI compliant, so the company meets all card industry standards for protecting customer data. Payment Depot’s 24/7 customer service ensures you can always speak to an associate about your card security concerns.
In addition, the company’s membership-based model, wholesale rates, and no cancellation fees make it a popular choice. Contact our award-winning support team today to learn how we can help your business.