Australia’s Optus outage is the reason the world needs real digital cash solutions
In the wake of the Optus outage that left Australian businesses inoperable, small and medium businesses (SMBs) are seeking alternatives to traditional payment systems that can withstand such technical failures.
On November 8, 2023, the Australian telecommunications giant Optus experienced a significant system failure, rendering Electronic Funds Transfer at Point of Sale (EFTPOS) and Visa transactions inoperable and triggering a ripple effect among small and medium businesses (SMBs). With estimates of losses running into millions, the incident has amplified the urgency for SMBs to diversify their transactional systems to mitigate such risks.
Relying on a single mode of digital transaction processing can leave SMBs vulnerable. The large scale Optus outage has shown us that. The dependency on telecom networks to carry payment authorisation and completion means that a single point of failure can have widespread consequences, from loss of revenues to degraded customer trust. When a cafe can no longer ring up a latte, or a local bookstore must turn away readers, the community fabric starts to fray.
Digital cash solutions provide an alternative pathway for transactions that is not beholden to a single network provider. They harness technologies like blockchain and distributed ledger systems to maintain a decentralised database of transactions that is highly resilient to localised outages.
While Bitcoin has long been touted as a digital alternative to cash, several factors such as high transaction costs and slow processing times make it less viable for SMBs, particularly those with high volumes of low-value transactions, such as coffee shops and convenience stores. In contrast, digital cash solutions like nano are emerging as more suitable safeguards for SMBs during system outages.
Digital Cash Solutions
Digital cash solutions provide an alternative pathway for transactions that is not beholden to a single network provider. They harness technologies like blockchain and distributed ledger systems to maintain a decentralized database of transactions that is highly resilient to localized outages. Here’s how they could shield SMBs:
Decentralisation means there is no single point of failure of the likes we’ve seen here with Optus. Digital cash solutions create a robust network where transactions are not routed through a centralised hub. This reduces the risk of a complete operational shutdown caused by issues in a core network.
With digital cash, businesses have a backup payment system in place, ensuring that they are not solely reliant on traditional banking networks, which may be compromised during telecom outages.
By diversifying payment methods, SMBs empower themselves to retain customer transactions and continue functioning despite disruptions, demonstrating reliability and building consumer confidence.
In many cases, digital cash payments can be facilitated through simple interfaces and devices like smartphones, providing an intuitive customer experience that closely mirrors familiar payment methods.
Why Bitcoin Falls Short for SMBs
The key attributes that a digital currency should possess to serve effectively as a backup during a system outage are low cost, high speed, and simplicity. Unfortunately, Bitcoin does not consistently deliver on these fronts — and here’s why:
1. High Transaction Costs: Bitcoin’s popularity has led to increased transaction fees, which can become exorbitant during times of network congestion. For a coffee shop dealing with numerous small transactions throughout the day, these fees would significantly cut into profit margins, making it impractical as a replacement payment method during outages.
2. Slow Transaction Times: The time it takes to confirm a Bitcoin transaction can vary significantly, often taking anywhere from minutes to hours, and sometimes longer if the network is congested. In a fast-paced coffee shop environment, such delays are untenable as they would lead to long queues and frustrated customers — the antithesis of the ‘quick coffee run’.
3. Complexity and Volatility: Bitcoin’s price volatility poses a considerable risk for SMBs which operate on thin margins. Furthermore, the technical complexity associated with managing a Bitcoin wallet and transactions can be daunting for small businesses without dedicated IT support.
Why Nano is a Better Fit for SMBs
On the other hand, as an ultrafast and fee-less digital currency, nano stands out as a robust solution in an increasingly digitised world where businesses are facing the harsh realities of system outages.
1. No Transaction Fees: nano eliminates the cost barrier entirely with its fee-less structure, meaning a coffee shop could accept many transactions over the course of a day without fretting about cumulative costs. As well as this, customers using nano would pay less than those using traditional mechanisms such as EFTPOS or Visa as there are no transaction costs for the operator to absorb and which in most cases need to be passed on to the customer.
2. Instant Transactions: nano’s block lattice infrastructure allows for near-instantaneous transactions. For businesses that thrive on quick service, such as coffee shops, this speed ensures a smooth, cash-like transaction experience for both the customer and the business.
3. Simplicity: The simplicity of executing a nano transaction, often via a simple QR code scan, means businesses can quickly train staff and inform customers about the alternative payment method, which is essential during unexpected system outages.
Smart Business Preparedness with nano
Adopting nano or comparable digital cash solutions involves several strategic benefits for SMBs, specifically in scenarios like the Optus outage:
1. Ease of Transaction During Outages: With nano, businesses can maintain operational efficiency even when traditional EFTPOS or Visa systems go down, as the decentralised system of nano remains unaffected by local outages. While nano utilises the internet to broadcast transactions, business owners can still receive nano payments from customers who are connected with non-affected telecommunications services, even when their own service might be down.
2. Enhanced Customer Experience: Customers are able to continue making purchases even during outages, which can improve customer trust and loyalty — critical elements for SMBs like coffee shops, where repeat business forms the backbone of their revenue.
3. Operational Resilience: By integrating nano, businesses diversify their payment options, thereby future-proofing against similar outages and demonstrating to customers their commitment to continuity of service.
4. Global Reach Without Local Dependencies: For SMBs with an international customer base, nano enables continued transaction capability without being stifled by local system disruptions.
SMBs: Redefining Transactions in the Wake of Adversity
The Optus outage serves as a wake-up call prompting SMBs to ponder on their dependency on centralised financial networks. It beckons the question of how SMBs like coffee shops, grocery stores, and other small businesses — often the hardest hit by such disruptions — can insulate themselves against significant revenue loss.
For such businesses, Bitcoin, though a pioneering cryptocurrency, falls short mainly due to its scalability issues that give rise to higher fees and slowed transaction speeds. On the flip side, nano emerges as a lean, fit-for-purpose alternative with its zero fees and swift transactions, making it particularly suited to the high-volume, low-margin operations typical of many SMBs.
Educating business owners and consumers about the advantages and usage of digital cash solutions is the next critical step. Forward-looking SMBs that adopt these solutions will find themselves better equipped to tackle the challenges posed by system outages. More importantly, by choosing the right cryptocurrency that aligns with operational needs, such as nano over Bitcoin for everyday retail transactions, SMBs can ensure that when the next Optus-like outage strikes, they will remain unfazed and financially secure.
A note from the author and from Lilac Draccus Media
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