Hundreds of thousands of workers faced the weekend without being paid after a glitch in the banking system meant their wages did not appear in their accounts.
The Bank Automated Clearing System (BACS), which processes financial transactions, had been running slowly for days, with the result that up to 400,000 salary payments had not reached their destination at the expected time.
TowerGroup, a research and advisory firm for the global financial services industry, has responded to the issue with the following statement, provided by Gareth Lodge, an analyst for European Banking & Payments:
“This problem couldn’t come at a worse time for the industry – the latest in a series of revelations including theft of credit and debit card details could lead to a backlash against electronic payments as consumers lose faith in the systems.”
“There have been many incidents over the years with payments being submitted late, and history shows there is little impact even in the short term. However, the press release from APACS implies a system error. If this is the case, it is significant.”
“The system itself has never failed in 35 years – the only previous outage was as a result of BT failing and not BACS. Voca, the processing company behind BACS, has just spent approximately $200 million redoing their systems, and is trying to sell its capabilities around Europe. A systems failure could have catastrophic effects – the system processes over $60 billion a day, and is used to pay 90 percent of the workforce and 70 percent of utility bills. Should this fault get worse, there are huge implications for the economy.”