Payment system failures threaten billions in UK retail and hospitality revenue

A recent study highlights risks facing UK retail and hospitality sectors linked to payment system failures. The research, carried out by FreedomPay in collaboration with Retail Economics, estimates that annual losses could reach £1.7 billion if disruptions continue. The findings are based on surveys of UK consumers and business managers and measure the frequency and impact of payment system outages.

UK businesses report experiencing around 5.2 major disruptions each year, with most occurring during peak trading periods when financial and operational exposure is higher. Retail accounts for an estimated £1.2 billion of potential losses, while hospitality is estimated at £494 million. The report notes that while many businesses are aware of these risks, the speed at which revenue loss can accumulate during outages is often underestimated.

The impact of payment failures is not limited to financial loss. Over half of retail and hospitality managers report incidents of customer confrontation during payment disruptions, often linked to frustration at the point of sale. Only around 40% of businesses provide offline card processing, which can limit available options during system outages. The report also notes implications for staff experience, including pressure on morale and retention.

Differences in customer behaviour are also highlighted. Younger consumers under 45 are more reliant on digital payments and are less likely to carry cash, which can increase frustration during outages. This group is also more likely to share negative experiences online, which can contribute to reputational impact. The average payment outage is reported to last around 79 minutes, while consumer tolerance is around 13 minutes before purchase abandonment begins, contributing to customers switching to alternative providers.

The report indicates that restoring payment systems quickly can reduce losses, with recovery within five minutes preventing a large proportion of potential impact. Between approximately 8 and 13 minutes of disruption, estimated losses may exceed £50 million per minute as abandonment increases, highlighting the importance of rapid detection and recovery.

As cash usage declines, fewer consumers now carry it as a fallback option, increasing reliance on digital payment systems. The findings suggest that resilience in payment infrastructure is increasingly important for maintaining continuity, reducing disruption-related stress for staff, and supporting customer retention in a more digitally dependent retail environment.