The Green Sheet Online Edition
May 26, 2025 • 25:05:02
Redundancy pays off in retail, payment providers should follow
Many organizations that accept electronic payments face a critical yet overlooked vulnerability: the widespread reliance on payment platforms that connect to just one merchant processor. While this single-processor approach might optimize costs for payments platforms, it creates significant, yet often overlooked, risks for the banks, credit unions, lenders and other businesses that depend on these platforms for their day-to-day operations.
What happens when a merchant processor experiences an outage? The answer is both simple and alarming: payments stop. For organizations connected to payment platforms with only one processor integration, this means their customers suddenly cannot make card payments—even if the platform itself is functioning perfectly.
The consequences are swift and severe, impacting revenue, operations and customer relationships.
Consequences of outages for banks, billers, iGaming operators
When a processor goes down, the impacts are immediate and severe:
- Revenue delays become inevitable. Card payments simply don’t process. For lenders managing loan portfolios, this creates cash flow disruptions that can affect their business operations. iGaming operators face even steeper consequences.
During outages, players abandon affected platforms within minutes, gravitating toward competitors with uninterrupted service capabilities—precisely what processor redundancy provides.
- Customer service costs skyrocket. The average customer call now costs upwards of $0.95 per minute, according to industry data (see (see bit.ly/3ZqG65F)). During processor outages, call volumes can increase tenfold as confused customers attempt to complete their payments.
For billing organizations processing thousands of transactions daily, this can mean hundreds of thousands in unexpected call center costs. According to McKinsey & Co. research, (www.mckinsey.com) more than 60 percent of operational failures, such as outages, result in at least $1 million in total losses, with costs continuing to worsen as industry efforts to improve reliability fall short.
- Customer satisfaction plummets. When processor outages prevent payments, customer frustration escalates immediately. Recent industry research shows 23 percent of iGaming players who experience funding issues abandon platforms permanently, never to return.
For financial institutions, the damage extends beyond the immediate transaction. Customers may miss payment deadlines through no fault of their own, damaging their credit scores and destroying trust.
The truth is, processor outages aren’t rare anomalies; they’re inevitable occurrences. Weather events, security incidents, software updates and network issues all cause processor downtime. The question isn’t if processors will experience outages, but when, and how prepared your payment platform is to handle them.
The necessity of processor redundancy
The solution to this vulnerability is straightforward but surprisingly uncommon among payment platform providers serving financial institutions, billers and iGaming operators: payment platforms need to maintain connections with multiple processors. This creates an automatic fallback system if the primary processor experiences an outage.
Here’s how processor redundancy should work: When a payment platform detects issues with the primary processor, it automatically reroutes transactions to an alternate processor, making the transition invisible to both the organization and its customers. While this approach may be a best practice in retail, adoption has lagged significantly among platforms serving financial institutions, billers and iGaming operators.
The reluctance of some payment platforms to implement processor redundancy can be due to technical limitations. For organizations attempting to build redundancy on their own, the barriers are steep: they must manage multiple integrations, maintain PCI compliance, possibly handle non-portable tokenization and reconcile inconsistent data streams from each processor.
In contrast, working with a payments partner that has built-in redundancy eliminates this complexity and ensures business continuity without sacrificing time, budget or engineering resources.
Rather than addressing this vulnerability directly, some platform providers suggest that offering multiple payment methods (PayPal, Apple Pay, Venmo, Cash App Pay) provides protection against processor outages. This is a dangerous misconception. Most digital wallets and payment apps ultimately process through the same card networks and merchant processors as direct card payments.
When the underlying processor fails, both traditional card transactions and digital wallet payments can be affected simultaneously. True protection comes from combining payment method diversity with processor redundancy. A modern payment platform should provide both: multiple payment options for customer convenience and redundant processor connections to ensure uninterrupted service even during outages.
Setting a new standard for payment reliability
Financial institutions, billers and iGaming operators must recognize the critical importance of processor redundancy when selecting payment platform providers. Despite the prevalence of single-processor platforms in the market, this lack of card processing redundancy represents an unacceptable risk to the organizations’ operations, revenue and customer relationships. Payment platforms serving these industries have a responsibility to implement the redundancy measures necessary to ensure continuous payment processing.
While maintaining multiple processor integrations may require additional investment and impact the platform’s transaction fees, it eliminates the single point of failure that threatens clients’ revenue, customer relationships and operational stability when processors inevitably experience downtime.
In today’s always-on economy, reliability isn’t optional; it’s foundational. 
Steve Kramer is the vice president, product at PayNearMe, where he leads the product development team. With more than 25 years of payments and product experience, Steve ensures PayNearMe’s solutions lead the market by reducing consumer friction and offering the widest range of payment options and channels, all while staying focused on security and reliability, to ensure clients collect every payment, every time. Connect with him via LinkedIn at linkedin.com/in/skramer0.
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