Part #1: How Cayan helps protect merchants from costly downtime

(This is part 1 of a 3 part series)

No merchant ever wants their credit card system to go down. Whenever merchants' credit card systems go down, they lose sales, having to turn away customers who can't pay with cash or a check.

To mitigate against downtime, a number of payment processors - including Cayan - have implemented "Store and Forward" solutions that allow merchants to accept card based payments even when their ISP or payment processor is offline.

Store and Forward solutions are designed to provide offline authorizations. Store and Forward kicks in when a merchant's Point of Sale can't communicate with the merchant's payment processor, or the card's issuing bank/card network in order to obtain an online authorization. Merchants using Store and Forward are willing to authorize transactions offline, within certain limits, so that they won't lose sales.

Even though some small percentage of cards will decline, many merchants think that it's better to take that chance than to risk losing a sale. In the field, Cayan has seen that roughly 2% of offline transactions decline when they're later replayed, and up to another 1% of transactions partially approve, due to the card having insufficient funds (think "pre-paid VISA/MasterCard").  All told, this results in a merchant's net take typically being about 2.5% "lighter" during an outage if they were using Store and Forward versus if they were online.

Many Store and Forward solutions (including Cayan's) allow merchants to implement configurable "floor limits" in order to help limit the merchant's liability while they're running offline. While this does help reduce a merchant's exposure while in Store and Forward mode, this can lead to lost revenue and can result in an involved checkout process that involves cashiers calling the cards' issuing banks to obtain voice authorizations whenever the sale exceeds the merchant's floor limit.

Store and Forward is a nice stopgap measure, but it's no panacea. Ideally, we'd like to avoid downtime altogether. While no system can promise you 100% uptime (uptime is generally measured in how many "9"s you promise – the more, the better), there are a number of things that both merchants and payment processors can do to improve your uptime and decrease your risk.

We'll talk about how high availability works, and some strategies merchants can use to avoid downtime in part 2 of our series, due out this Wednesday.