Having run various eftpos systems over the years I am able to recall the various technologies that are in place even if they are little used today.
In reading about recent outages and considering some of the other outages that have been experienced it seems to me that the impact of the outages is getting worse.
Now the simplest answer to that is that as cash usage has reduced over the years the reliance on eftpos has increased therefore outages are more painful and that answer is absolutely correct. However, with the rise of digital and contactless payments it seems that we have also lost a backup capability that would ease the impact of an outage and this too might be the cause of the severity of the recent outages. Let me explain.
Some background
When chip cards were put into the market in 2008 the terminal would read the chip on the card and process the transaction. If the terminal couldn’t reach its host it had a pre-loaded limit, called a floor limit, that was loaded into it that would allow a lower value transaction to be stored in the terminal until comms could be re-established.
The limits were set by the card schemes and applied depending on the type of business you were running so a petrol station had a different value to a supermarket or a coffee shop. In any case the limits were usually between $30 and $60 more than enough for lunch or a coffee in most circumstances.
The problem
The issue arose in 2013 when contactless cards were introduced. To my understanding the card schemes believed that their floor limits didn’t apply to contactless transactions and as such new limits needed to be set. Talking to the issuing members the schemes were told that the issuers would set the limits for contactless at zero which they did effectively removing the redundancy capability that once existed.
So the scenario that we find ourselves now in is that with the rise of contactless and then digital payments cardholders very rarely insert their cards into a terminal any more so most transactions are trying to be processed as contactless with zero floor limit. As transaction values have decreased over time meaning more and more transactions would fall under the floor limits, we aren’t collectively inserting cards so when an eftpos terminal loses connectivity effectively all transactions are offline hence the impact of any one outage seems worse than they used to.
Is there a solution?
Maybe during the next outage some merchants or customers should try and insert the card rather than tapping it as depending on the transaction value it would probably process successfully. Now this won’t help all those that joyfully tell me they don’t have a wallet anymore but if you did have your card it could allow you to finalise your purchase and allow the merchant to lose one less sale than they otherwise would have.
Alternatively, maybe the industry needs a rethink on zero floor limits for contactless and digital transactions or the regulators could consider their options in the name of improved uptime and cardholder experience.
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