First Tesco, now Sainsbury’s: why do contactless payments keep crashing?

Major retail chains Asda, McDonalds, and Sainsbury’s are reporting payment errors with their card machines this morning, after a mass Visa outage affected hundreds of shoppers.

Spending blackouts have been a regular occurrence this year. Last month, bank customers at HSBC, Nationwide, Barclays and Virgin Money experienced payment problems after a technical glitch with a third-party payment operator.

Visa has now issued a statement saying that the issues have been resolved. However, the frequency of these payment glitches means many customers are now questioning if the UK is moving too quickly towards becoming a cashless society.

Payment outages

Legacy issues within payment operating systems have resulted in Brits being hit by payment difficulties almost every month this year.

• In March, Greggs, Tesco, Sainsbury’s and McDonalds all suffered IT meltdowns that prevented them from taking card payments, forcing many stores to close
• In April, Nationwide customers were left unable to access their online bank accounts
• In May, Sainsbury’s experienced a card terminal glitch that resulted in many shoppers abandoning their baskets in the supermarket
• In June, a mass banking outage meant some UK employees weren’t paid on time

According to the consumer data analytics website Down Detector, over 600 people were impacted by the problems with Visa cards, which began at 8am on Thursday morning.

Sainsbury’s said the issue only lasted a few minutes. However, Asda was only able to confirm that services were back up and running at 10:30am.

Shoppers took to social media to highlight how the service issues at their local businesses have affected them. Many reported long queues as multiple cards were declined.

Can we go cashless?

The reported payment issues have raised concerns about the UK’s transition to a cashless society. Businesses are increasingly transitioning away from bank notes and coins, with some even refusing to accept cash.

In a post shared on X (formerly known as Twitter) today, one user wrote: “Cashless society worries me. Just now, the card machine in the post office was not working, most had to turn around and go home again.

“I hate that we become more dependent on tech and that a few big businesses cream off the top of every purchase. It’s another tax.”

Cash handling can require more complex management, which can also raise costs for SMEs. Small business owners also have to consider the staff training involved and insurance costs related to handling cash, not to mention the higher risk of robberies.

Still, the spate of technical errors that UK shoppers have seen over the last four months has highlighted the disadvantages of moving away from cash too quickly.

When using card readers to accept payments makes businesses reliant on a third-party credit card merchant. It can also create security risks if the provider suffers a data breach.

Sweden, which is one of the leading cashless countries, has learnt this the hard way. After it ditched paper money post-COVID, the number of card frauds increased by 44 percentage points between 2022 and 2023, according to Sweden’s central bank, the Riksbank.

Andrew Martin, CEO and Founder of SMEB, says: “Today’s payment outages shine a fresh light on the continued importance of cash and why the march to a cashless society is a bad idea. We’re seeing a growing number of businesses across the UK label themselves as ‘cashless’ venues and it makes you wonder how they must cope when technical glitches like this happen.”

How can you protect my business against payment outages?

The majority of organisations reported to have been affected by today’s outages are large businesses. They can better absorb the impact of a fall in sales compared to small firms who typically have smaller cash reserves. For SMEs, one day of transactions is make or break.

Outages are also an issue for brick-and-mortar stores because smooth, quick checkouts are prioritised by today’s consumers.

Self-service machines and smart payment technologies have given shoppers more control over their purchasing experience; and made them less willing or able to deal with disruption.

That makes avoiding payment delays vital for both cash flow and meeting customer needs.

Businesses can defend against card machine glitches and bank transfer troubles by using a card provider that accepts multiple payment methods. This will ensure business continuity in the event of a crisis. Plus, it will cater to a wider range of consumer preferences.

Other payment methods besides cash or chip and PIN include:

• Virtual terminal to take payments over the phone
• Buy Now, Pay Later (BNPL) services such as Klarna
• Digital wallets such as Apple Pay and Google Pay

Some Brits feel strongly that the UK shouldn’t be cashless. Yet taking cash payments can be complex. Read our guide to the tax and VAT laws on paying with cash.