Article

Cards fail; cash prevails

A Cyber Monday system crash at RBS illustrates why the world isn't quite ready to go cashless.

December 4, 2013 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

On one of the busiest days shopping days of the year, Cyber Monday, 24 million RBS Group customers across the U.K. got schooled in the pitfalls of plastic. At 6:45 p.m., RBS computer systems crashed — for three hours. 

Parents were unable to pay for their kids' Christmas presents; customers were stranded at petrol stations; shoppers at supermarkets were embarrassed to find themselves without the means to pay for the groceries they'd rung up.

Bold subheads in Britain's Daily Mail proclaimed:

• British troops in Falklands couldn't pay for dinner after cards were rejected
• Groups of shoppers turned away en masse at supermarkets
• Glitch also left millions unable to pay for online purchases or in shops
• Bank unsure what caused it, but will compensate out-of-pocket customers

RBS, NatWest and Ulster Bank — all owned by RBS Group — announced that "technical issues "were preventing customers from gaining access to their funds through any the the bank's electronic channels — online, mobile or ATM.

For Internet users with no other means of electronic payment, there was no choice but to empty their virtual baskets. For consumers at high street stores and supermarkets, cash was the only alternative. 

Help lines were quickly jammed and in short order, #natwest became the top nationwide trend on Twitter as hordes of customers checked in to ask for answers and just generally express their annoyance. 

Oddballs

The heavyweights of the cards industry, Visa and MasterCard, will tell you that cash should be replaced with electronic payments. For years, these giants have been investing money in anti-cash campaigns. But Monday's epic fail comes with strong echoes of the past.

At the London Olympics just last year, a cashless trial by Visa failed on its first day, meaning that visitors to Olympic Park could not purchase food, drinks, souvenirs, or anything. Those who brought cash couldn't spend it because vendors didn't have cash tills. Which was just as well, since those who hadn't brought cash had no ATMs to withdraw from at Olympic venues — Visa had shut almost all of them down.

"I hope that the odd balls who have been calling for the displacement of cash are RBS customers and saw for themselves what their brave new world of electronic-only payments means," said Brendan Doyle, CEO of U.K.-based Cash Management Solutions.

'Our bad'

RBS Group should, by now, be expert at issuing apologies. In June 2012, thousands of the FI's customers were left unable to withdraw cash for as long as five days while the bank tried to revive its failed computer system. 

More recently, the bank found itself apologizing to customers on Nov. 28, during a Web-related issue, and again on the next day, when mobile services were disrupted.

On Tuesday morning after this week's debacle, RBS Group issued yet one more apology, saying that they were "very sorry" for the issues that had occurred, and that "If customers have been left out of pocket as a result of these system problems, we will put this right."

Of course, this will be small comfort to humiliated shoppers who discovered they could not pay for purchase while a queue of 10 people waited behind them.

The bank also opened its offices early for a few days after systems were back up in order to help customers who had been affected by its IT failure.

It would be very interesting to know whether customers also made a special trip to their nearest cash machine to take out a few hundred pounds in cash — just in case. 

"Cash is freedom and will hold an important place in payment means for a long time to come," said Doyle. "It cannot be declined by a third party system and if you have it, you can spend it — which is a pretty essential feature of money." 

Read more about transaction processing.

Photo: nima badiey

Additional research for this story was provided by Suzanne Cluckey, editor, ATM Marketplace 

About Suzanne Cluckey

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Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally.