The Green Sheet Online Edition
September 8, 2025 • 25:09:01
Reliability at risk: Payments under pressure
When a payment network goes down, customer loyalty erodes. This is not new. But for today's consumers, payment alternatives abound, and more often than not, they vent their frustrations on social media platforms.
"When consumers can't complete transactions as expected, it impacts trust in the provider," said Tony Allen, CTO at Recurly, a subscription management and recurring billing platform. "They may look for another platform that can do the function for them."
Ditto for businesses running credit/debit card transactions through processors and/or gateways. We've all heard accounts of these going down.
"We really don't want systems to go down," said Robert Hewlett, senior managing director at Jack Henry, and that company's payments technology maven. That's why, he noted, Jack Henry, and other companies that support financial institutions' payments operations, engage in regular disaster recovery exercises.
"In the event there is a problem in one data center, we can move to another data center without missing a beat," Hewlett told me. He added that Jack Henry also uses a variety of rails to move payments for FIs and their customers. "In the event one goes down, we can use another so payments get made on time."
Not so if you're moving money over non-bank networks. Back on Aug. 1, 2025, when PayPal and Venmo both went down for several hours, thousands of users from across the globe reported problems. Downdector, a popular outage tracking website, showed outage reports began just before 9 a.m. that day for both of these popular payment apps. (Venmo is owned by PayPal which would explain the fact that both networks went down at the same time.)
About three hours later, both networks were operational. But that didn't stop consumers from complaining on various social media platforms. The disruption of service was magnified by the fact that it occurred on the first of the month, an important time for many consumer transactions.
Since I am the self-proclaimed payments maven of the fourth estate, friends and colleagues were quick to report the problem to me. My initial response: try a competitor; there are plenty. For example, there are Block's Cash App, Apple Pay, Google Pay and the bank-owned network Zelle. Lesser-known alternatives also exist, many of which specialize in international payments. These include Remitly, Revolut and Wise. But, as person-to-person networks, all of these have limited access to business and government entities.
Cash as a 'solution'?
If you were in New Mexico on Sept. 2 and wanted to apply for a fish or game license, for example, you would have been out of luck unless you had greenbacks. The state "Department of Game and Fish has experienced a BOT attack, which has caused the department to shut down its online payment processing system," the department stated in a press release that came across my desk.
"During this time," the department continued, "customers will be unable to purchase licenses or permits with a credit card. In the interim, we have a solution to ensure our customers can still get into the field and enjoy New Mexico's outdoors. All NMDGF licenses and permits can be purchased with cash at any of our approved vendor locations across the state." (Emphasis theirs.)
Cash was their solution? That is so early 20th century. That's coming from a baby boomer who still does carry cash, but who has been covering the payments space long enough to know that cash is not a "solution," at least not the way cards and digital wallets are solutions already in wide use among young hunters and fishermen.
Banks held to higher standards
When it comes to moving money, as Hewlett noted, FIs have a range of options. These include ACH, wire transfers and real-time payments. In each case, private sector options are available, as well as services provided by the Federal Reserve. Most options, however, rely on the Federal Reserve to effect final settlement. So, what happens if the Fed's systems crash?
This is no esoteric question. It happened in 2021. The problem was chalked up to an "operational error" that affected Fedwire, Fed ACH and the National Settlement System. With those systems down for several hours, many FIs turned to The Clearing House to move payments.
It's worth noting that the Fed almost never goes down. As the website GetBalance.com noted in a post on the outage, the uptime for Fed ACH is 99.99 percent, which means it's offline for no more than 1 minute and 26 seconds per day. The Clearing House operates an ACH service called EPN, a wire transfer system known as CHIPS, and a real-time payment network known as RTP. (TCH provides backend processing for person-to-person networks like PayPal, Venmo and Zelle. Interbank transactions initiated through those systems clear through EPN or RTP.)
"We are fortunate in this country to have two high-value [payment] systems," Richard Dzina, senior vice president for core services at TCH, told me in an interview. But here's the catch: CHIPS, the large dollar wire transfer system, relies on Fedwire for funding, Dzina explained.
While CHIPS has just 42 participating banks, these are the largest banks in the world. The Fed serves thousands of FIs of varying sizes, with services that include ACH, wire transfers (via Fedwire) and real-time payments via FedNow.
The 2021 episode "put a spotlight on this vulnerability," Dzina said. It also spawned new-found appreciation for having a private sector alternative to the Fed and drove home the need for contingency planning. "We're focused on industry resiliency when confronted with cyber threats and market disruptions," Dzina added.
Testing resiliency
TCH has positioned itself as a private sector competitor to the Fed. But as the 2021 incident revealed, the two are mutually reliant on one another. Further evidencing this fact, they are planning a September test, simulating a failure of Fedwire that requires flipping Fedwire's workload to CHIPS. The test will be run with the help of the Analysis and Resilience Center for Systemic Risk (ARC for short).
ARC is a coalition of financial services firms that work together on strategies and solutions to identify, prioritize and mitigate systemic risk to the nation's financial services infrastructure.
Members include the Fed, the nation's largest banks, and numerous financial services companies and organizations, including the Depository Trust and Clearing Corporation (DTCC), Fiserv, Freddie Mac, Jack Henry, Mastercard, Nasdaq, Prudential Insurance, SWIFT (the international network that facilitates international fund transfers through message exchanges, not money itself), and TCH.
"We do not expect it to be perfect," Dzina said, pointing out that the goal of the test is to get a sense of market readiness. "I would expect something like this to be a yearly exercise," he noted, the idea being that the Fed, TCH and the banks will identify ways to refine processes and protocols that could be put to use in the event of a future failure. 
Patti Murphy is senior editor at The Green Sheet, president of ProScribes Ink (www.proscribes.net) and self-described payments maven of the fourth estate. Her Today in Payments reports are a regular feature of the Merchant Sales Podcast.
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