A Square outage last Thursday sent merchants into a financial tailspin, as thousands of Cash App and Square customers were unable to log into their accounts or accept payments. Merchants reported thousands of dollars in lost revenue. As of Thursday afternoon, Square reported 18,000 outages and Cash App reported 9,000 outages, according to MSN.

  Furthermore, the financial impact is not only felt in the U.S. In fact, the financial impact will be widespread as Square currently operates in the UK, Spain, Japan, Ireland, France, Canada, and Australia. On Monday, Square issued an apology and revealed the source of the problem in a written statement on its website: “The outage impacted an important part of our infrastructure, known as a Domain Name System, or DNS. While making several standard changes to our internal network software, the combination of updates prevented our systems from properly communicating with each other, and ultimately caused the disruption.”   When Digital Payment Solutions Fail Square’s outage follows similar outages this year, including an outage at Chase, which led to the disruption of all Zelle transactions.

In this particular incident, real-time payment networks developed for app-based payment systems essentially collided with legacy banking systems that were originally designed to process physical checks. As more consumers opt to go cashless, they grow increasingly dependent on financial institutions and payment service providers. Although these tech glitches always get resolved, the financial impact can be detrimental on small and medium-sized businesses who depend on these providers to process payments. As reported by merchants, an outage—even just for one day—can cause thousands of dollars in lost revenue. These glitches can lead many merchants to distrust financial institutions and payments providers, or even a step further, have them seek out internal solutions to handle their payment needs.

By Connie Diaz De Teran
Sep 11, 2023 00:00
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