A new study released today reveals the staggering cost of payment system failures to UK retail and hospitality businesses, estimating losses of £1.6 billion annually.
The research, conducted by FreedomPay and Dynatrace in partnership with Retail Economics, highlights the increasing frequency and impact of these disruptions on day-to-day trading, with consumers exhibiting low tolerance for delays. Adding to the concern, the study finds that 1 in 5 retail and hospitality businesses lack a secure digital backup when systems fail, exacerbating the potential for lost revenue.
The study indicates that these failures are not isolated incidents but a recurring operational challenge that disrupts service, damages customer trust, and negatively impacts revenue. UK businesses are reporting an average of over five major outages each year, with 61% occurring during peak trading periods, amplifying the financial impact.
“Consumer-facing businesses are operating in increasingly unpredictable conditions,” says Chris Kronenthal, President, FreedomPay. “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.”
Key findings from the study include:
- Consumer tolerance: Most consumers will only tolerate up to 6 minutes of payment disruption before becoming frustrated, with 22 minutes being the absolute limit. The average outage, however, lasts 84 minutes – far exceeding consumer patience.
Costly blind spots: Businesses are dangerously out of touch with consumer patience, overestimating their willingness to wait during payment disruptions (32 minutes vs. the actual 22 minutes) and failing to recognise the immediate customer attrition this misjudgement causes, leading to significant revenue loss and damaged brand reputation.
Payment system downtime is costly: If a payment system goes down between minutes 7 and 11, businesses could lose an average of £73 million in sales every minute.
Losses quickly add up: By minute 22 of the outage, total losses could reach £1.17 billion. That’s a whopping 74% of all the revenue at risk.
Reliance on mobile and card payments continues to rise: Less than 30% of consumers always carry cash when visiting shops, restaurants, or leisure venues. The average amount carried is £35, which is less than the average in-store spend of £47.
Vulnerable consumers: Higher-income consumers, who tend to visit physical retail and hospitality venues more frequently and rely more heavily on digital payments, are disproportionately affected by payment disruptions.
Backup gaps: 22% of businesses study having no backup payment method beyond cash, and 7% have no fallback at all.
“Payment resilience isn’t just an IT issue, it’s a critical business capability”, adds Alois Reitbauer, Chief Technology Strategist, Dynatrace. “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.”
“In today’s hyper-competitive landscape, seamless payment experiences are non-negotiable,” states Richard Lim, CEO, Retail Economics. “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.”
