%201.webp)
FreedomPay has published research estimating that payment failures put up to AUD $3.1 billion a year in Australian retail and hospitality sales at risk. The study highlights growing pressure on businesses as card surcharges are set to end.
Based on surveys of 2,000 Australian consumers and 200 business managers, the research comes as merchants weigh how to respond to the removal of surcharges on card payments. It argues that any attempt to steer shoppers back to cash would run counter to current consumer behaviour, particularly among younger customers.
Digital and contactless payments now dominate day-to-day spending in Australia. The study found that 95% of Australian card payments are contactless, while only 13% of Gen Z consumers and 16% of Millennials always carry cash, compared with 48% of Baby Boomers.
That shift has increased the commercial cost of even short disruptions at the till. According to the report, the average payment outage lasts 136 minutes, but consumers begin to lose patience after five minutes and often abandon purchases within 10 to 11 minutes.
Retail and hospitality operators reported an average of five payment disruptions a year. More than half, 53%, occur during peak trading periods, when the impact on sales is greatest.
The study estimates that restoring payment systems within five minutes can prevent up to 91% of potential losses. Between the sixth and 10th minute of an outage, lost sales average more than AUD $79 million a minute as customers walk away.
Immediate revenue loss is only part of the problem. Nearly one in five consumers, 18%, said they abandoned their purchase during their last payment disruption, which the report estimates cost AUD $554 million in direct lost sales.
There is also evidence of lasting reputational damage. Among digital-first shoppers, 71% said a single payment failure permanently reduces their trust in a business.
Younger consumers appear especially sensitive. The study found that 72% of Gen Z and 65% of Millennials were the groups most likely to complain or post negative reviews after a payment problem.
Weak points
Power outages were identified as the largest single source of disruption for Australian traders, putting AUD $1.126 billion in annual sales at risk, or 37% of the total estimated exposure. Point-of-sale system failures were the second-largest source, accounting for AUD $730 million, or 24%.
Businesses appear aware of the risks. The research found that 78% agree that power outages, extreme weather or cyber incidents pose a growing threat to payment continuity.
Even so, many operators still rely on limited fallback options. Some 18% of businesses use cash alone as a backup during outages, while only 53% use offline card processing, suggesting a sizeable share remain exposed when networks or systems fail.
The report also contrasted Australia with Britain on customer tolerance. Australian shoppers typically wait up to five minutes before frustration sets in, compared with seven minutes in the UK, and are more likely to abandon a purchase sooner.
That matters because the loss of card surcharges removes one way for businesses to offset payment costs. Some may see cash incentives as an alternative, but the consumer data suggests that approach may be difficult in a market where digital payments have become the default.
Chris Kronenthal, President, FreedomPay, said the issue had moved beyond operational inconvenience.
"Australia's rapid transition toward a cashless economy means payment resilience is directly tied to business survival and customer trust," said Kronenthal.
"In a market where digital payments are the default, an outage can jeopardise immediate revenue and create longer-term damage to brand trust and credibility, which is far more difficult to repair. That is why recovering systems within the first five minutes, thereby avoiding up to 91% of potential losses, is critical to protecting revenue, supporting staff and preserving customer loyalty."
The study was created in partnership with FT Longitude, which said speed of recovery had become a defining issue for merchants facing increasingly impatient consumers.
"While prevention will always be the goal, this research makes clear that speed of recovery is what separates the most resilient businesses from their competitors," said Piers Tomlinson, Editorial Director, Commercial Content and Thought Leadership, Financial Times.
"Australian consumers are among the most impatient in the world when it comes to payment failures, and the clock starts ticking the moment systems go down. A robust payments system is an operational safeguard that protects revenue, frontline staff and customer trust."