However, the Bank of Spain said that, as of 3:30 p.m. local time, the national and cross-border payments system was working normally, and that any residual problems were down to a lack of back-up power available to bank branches, merchants or consumers. At retailers, it noted, the point-of-sale terminals used to process payments may have run out of battery.
Prime Minister Pedro Sanchez has actively tried to reduce the use of cash in Spain in recent years in an effort to reduce tax evasion. In 2021, Spain lowered the amount of physical cash that businesses could receive in a single transaction to €1,000 from €2,500.
However, according to European Central Bank data, Spain still boasts a relatively high degree of cash usage, which accounts for 57 percent of retail transactions. Around 39 percent of Spanish payments that aren’t online are done through either card or mobile apps.
The vulnerability of cashless payments to disruption — either unintentional or deliberate — hasn’t gone unnoticed. Last month, Sweden’s central bank warned that it was important for resilience reasons for citizens to keep physical currency ready to use in case of emergency situations. Riksbank Governor Erik Thedéen referred to the “deteriorating security situation” in his comments, a nod to nearby Russia.
The incident comes only a few weeks after an equipment malfunction caused an outage lasting several hours at the European Central Bank’s TARGET system for processing wholesale payments. In this instance, however, the most important part of the eurozone’s financial plumbing continued to operate normally, the ECB said.
