Blackout in Iberia: A Wake-Up Call for Payment System Resilience
In an unprecedented event, Spain and Portugal recently experienced a massive blackout that left millions without power, shedding light on the vulnerability of essential services, including payment systems. This incident joins a series of challenges we’ve faced over the past year, including technical failures such as the CrowdStrike outage and the recent UPI glitches in India, as well as natural disasters such as the floods in Spain in November 2024. These events underscore the critical importance of developing robust and resilient payment infrastructures to secure our increasingly digital world.
During all these incidents, many consumers and businesses found themselves unable to complete transactions, leading to significant losses and inconvenience.
For example, Germany, has a daily retail turnover of 6 billion euros. Approximately 50% (Payment behavior in Germany in 2023 | Deutsche Bundesbank) of all retail payment transactions at the point of sale in 2023 were digital. If just half of these transactions fail, it results in a loss of 1.5 billion euros.
These disruptions highlighted the limitations of the current systems and the urgent need for infrastructures capable of withstanding similar challenges in the future.
Offline Digital Payment Systems: A Necessity, Not a Luxury
Payment systems are the linchpin of the economy, facilitating commerce and bolstering economic activities. Their failure can have severe repercussions, affecting not just individual consumers but the entire economic framework. Consequently, fortifying these systems to withstand disruptions is imperative.
In an era increasingly dominated by digital transactions, ensuring the resilience of digital payment systems is critical. Particularly for retail Central Bank Digital Currencies (CBDCs), an offline capability emerges as a pivotal feature. This functionality provides a trusted digital equivalent of cash, ensuring a secure and reliable payment method that remains accessible to all, in any circumstance.
However, the potential for offline capabilities extends beyond CBDCs, enhancing the resilience of all forms of digital payments. By integrating this feature, we can safeguard our economic activities and maintain seamless commercial operations, regardless of external disruptions.
Bridging the Gap: Digital Solutions for Real-World Scenarios
G+D Filia® Unplugged is engineered to enhance digital payments with offline functionality. It can be smoothly incorporated into current payment solutions, including retail CBDC, commercial banks’ tokenized deposit systems, instant payment systems, and mobile money services. This cutting-edge solution enables consecutive offline transactions between payers and payees, making it ideal for both merchant and peer-to-peer use cases, especially in areas where connectivity is unreliable or unavailable, or when there is a power failure.
From Darkness to Digital: Preparing for Any Eventuality
In times of infrastructure collapse, where access to electricity and the internet is compromised, cash has usually served as a dependable fallback. This reliability has made cash an important entry on global disaster preparation lists. However, in many developed nations, the routine availability of continuous connectivity results in individuals typically carrying less than EUR 100 in cash. This vulnerability was starkly highlighted during the Iberian Blackout, which incapacitated ATMs and restricted access to cash when it was most needed.
To address this issue, a novel feature can be integrated into payment apps: an offline emergency wallet. This allows users to allocate a specific amount of digital tokens to be securely stored on their devices at all times. The tokens are automatically topped up once funds are spent and the device reconnects to the backend. This ensures readiness and resilience in the face of infrastructure failure.
