The importance of contingency planning in payment processing

Contingency planning is essential for every business.  Also referred to as business continuity planning, it ensures you’re prepared for unexpected events that could cause operational problems for your business, or even disable it completely.


It involves thinking ahead and figuring out what could go wrong, how likely it is to happen, and how to deal with it if it does happen. Good planning and testing will minimize the negative effects of unexpected events and make sure your business can keep running smoothly.



Contingency planning for payment processing


While contingency planning covers all areas of a business, it’s arguably particularly critical for payment processing and managing cashflow.


What would happen if you suddenly lost the ability to process your Bacs debit or credit payments?


This could happen for various reasons but the fallout of derailed payment processing would be the same – disgruntled customers, suppliers and employees. Losing access to your Bacs processing software can lead to compromised data security too.  Not to mention the time, effort and cost of getting everything back on track.



Whatever your Bacs process, you need a Plan B


There are many ways to process and submit your Bacs files, whether that’s via your bank or by using a Bacs-approve software.  Either way, you need to have a Plan B if for any reason you’re unable to submit payment files to Bacs.


While banks have their own contingency plans, it’s important for businesses to have their own plans in place to ensure continuity of their operations. This is because a service disruption can affect other aspects of the business beyond payment processing. For example, if payments cannot be processed, it may result in inventory or supply chain disruptions, customer dissatisfaction and even reputational damage.


It’s essential to keep your bank updated with accurate and up-to-date information about your Security Contact to ensure a prompt response in case of any security incidents.


The Security Contact is the person or team responsible for managing security-related matters. If the contact information is incorrect or outdated, this can lead to delays in resolving the issue, and potentially put your business at risk.


Safety in the cloud

Generally speaking, cloud-based business systems take away the hassle of running and managing software solutions, so a cloud-based Bacs solution is a sensible choice.  They usually provide high availability rates with low downtime, although these will vary from one provider to another.


But be cautious, even cloud-based services are not 100% risk-free.  Using a cloud solution doesn’t mean you don’t need a contingency plan, after all you still need to connect to it via your internet connection.


Beware of smartcards

There are other aspects of your Bacs procedures that have inherent risks too.  In fact, your process itself might still be at risk if it relies on outdated technology, for example if you’re using smartcards.  These carry a range of risks, from cards being lost, people with the card being unexpectedly absent, or card failure because the required smartcard software has not been updated.


This single element of your approval and signing process has multiple points of possible failure and would be enough to crash your Bacs processing.



Who else is at risk?


Contingency planning for your Bacs processing is particularly critical if you’re using an on-premise service.


An on-premise service failure can cause a chain of significant negative impacts on your business. These can range from loss of revenue and decreased productivity to data breaches if hacked leading to potential regulatory or legal breaches.


Are you offering Bureau services to other business units or organisations?  Then the impact of a failure in your ability to process Bacs payments will have even wider repercussions and potentially cause reputational damage.


It’s also important to remember that maintaining your Bacs Approved Bureau (BAB) status requires you to have robust business continuity plans in place.



Three key benefits of robust contingency planning


  1. Minimise financial losses by helping you to identifying alternative payment methods or backup systems that can be used to ensure that payments can be processed or received.
  2. Lessen risk by removing reliance on smartcards or on-premise solutions.
  3. Minimise downtime and maintain continuity of operations in the event of a disruption.


The benefits of contingency planning are numerous, and businesses that invest in developing and implementing a contingency plan are better positioned to navigate unexpected events and continue to operate effectively.



5 key steps for an effective contingency plan


Step 1. Identify key payment processes that are most critical to your business and prioritise them in the contingency plan. This could include collecting recurring payments, signing up direct debit payment customers, making payroll payments on time and paying suppliers.


Step 2. Assess potential risks that could impact payment processes such as system failures or cyber-attacks. Evaluate the likelihood and potential impact of each risk.


Step 3. Develop backup plans such as alternative payment methods or contingency systems that can be used in the event of a disruption. Ensure that backup plans are feasible and effective.


Step 4. Develop a communication plan to ensure that customers, suppliers and employees are aware of any potential payment disruptions and understand how to make or receive payments using alternative methods.


Step 5. Test the plan regularly to ensure that it is – and remains – effective and up-to-date.



Keep your contingency planning in sync with your business


Businesses change over time, employees leave and new ones join.  New business tools get added and they way your business functions can change too.


So it’s important to review a contingency plan regularly to ensure it stays fit-for-purpose, up-to-date and effective. As your business evolves over time, adjustments may need to be made and a review ensures your plan reflects any changes in your business or your procedures.


By reviewing the contingency plan regularly, you can be sure that:


  • Your business is protected against new risks and threats


  • The information in the plan is accurate and up-to-date


  • You’ve identified any gaps or weaknesses in the plan before it’s too late


  • Your business remains compliant with current laws or regulations


A contingency plan is not something to do once and then forget.  It deserves care and regular attention if it’s to serve you well when you need it most.



Is it time to review your Bacs contingency plan?


At paygate, we assist businesses of all types in safeguarding their Bacs payment operations. Contact us for impartial advice on evaluating and enhancing your business continuity plan.




Need to review your payment processes? We’re here to help.

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