Uruguay’s Cashless Crash
Following an ‘aggressive strategy’ to grow cashless transactions in Uruguay, fintech service provider Fiserv experienced network disruption that knocked out card payments for thousands of businesses, with local media reporting it suffered a cyberattack.
Occurring in early October, Fiserv described the day-long outage as ‘an operational problem’ related to the Geocom network, which Fiserv acquired at the beginning of the year as part of ‘an aggressive growth plan’ aimed at increasing the cashless market and their share of it.
The Uruguay branch of Spanish-language newspaper El País later reported that, according to ‘sources within the financial system’, the network had suffered a cybersecurity incident in which criminals attempted a ransomware attack. While the sources suggest there was no data breach, the network was disrupted following the detection of ‘unusual activity’ within it. The Association of Private Banks expressed ‘concern’ over the situation and said they are monitoring it closely.
People in affected areas took to Reddit to express disappointment that it took ‘all day’ to resolve the issue, with one user pointing out it was especially unfortunate for McDonalds—one of the major retailers affected—as they were running a special ‘McHappy’ promotion that day. Another person commented on the confusion and long queues at their supermarket, saying ‘we thought cards would make payments faster.’
Despite the ambitions of the fintech industry, cash is the most widely accepted payment method in Uruguay, with economic newspaper Ámbito Financiero reporting earlier this year that 83 percent of businesses allow cash transactions compared to 42 percent accepting debit cards and 32 percent taking credit cards. The survey, conducted by Opción Consultores, also found cash is the lowest-cost way for around 60 percent of businesses to transact, and 77 percent choose it for the avoidance of card fees. Around 40 percent reported consumers simply prefer paying with cash.
Occurring around the same time as cashless payment outages across Australia and Canada, the Uruguay incident is a reminder that while adding new options to the payments landscape is a positive development, it is critical to retain cash, to ensure people have choice, payment providers have competition, and cashless payments have a backup that can be used offline and will never crash.