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Crowdstrike, a cybersecurity company which produces antivirus software, issued a software update this morning, Friday 19th July, causing a widespread error prompting the so-called "blue screen of death" on PCs around the world. The issue is causing havoc among electronic systems around the world with airlines grounding planes and retailers, banks and multi-nationals reporting major disruptions. So how does this affect cash, the cash supply chain and the wider payment ecosystem?
A Run on Cash?
With payments systems being affected by the outage, many retailers are only able to accept cash for customer payments. In the UK alone, there have been reports from many merchants of an impact, including major supermarket chains. Merchants who have made the decision to go cashless have had to shut stores.
With cash able to be accepted despite the outages, this is having a significant impact on cash demand in all countries, particularly from ATMs. In Pacific and European time zones, due to the time of the outage, CMS Analytics forecasts average ATM cash demand increases in excess of 40%. This demand increase has been heightened given that Friday –the day on which the outage fell in most worldwide time zones – is the day which experiences the highest cash demand.
There will likely be after-affects of this. Some ATMs may be affected on a technical level by the outage, however, as the demand spike continues, some are likely to run out of cash due to the increased demand. This will also have an effect on localised cash demand as ATMs that are out, for either technical or demand issues, will likely cause demand spikes on other ATMs in the vicinity.
FX and Travel Money Impact
Other cash sectors such as FX and travel money will also see an impact from the outage. Airlines and airports are grounding flights due to systems issues. Airport traffic is expected to be down due to these cancelations and there are also reports of manual checking-in processes. This will have an impact on both airport FX demand and potentially pre-trip demand throughout the weekend.
How is the Supply Chain Coping?
The cash supply chain is the ecosystem of organisations which assist in getting cash to the end-points it is needed. In many countries armored transport and CIT's internal systems are said to be affected by the outage which will cause an impact on the productivity of replenishments and services immediately. Increased branch and ATM demand due to the outage could also impact them in the following days as they try to catch-up with an increased demand for services. Again, this has not been helped by Friday being the highest cash demand day of the week, and also reduced armored transport servicing over the coming weekend days (at least in normal weeks).
A Show of Cash’s Importance
Ultimately, today’s events are showing the importance of cash as a payment instrument and for payment choice generally. Cash – and the value it holds – remains unaffected by outages and is not dependent on any electronics payment infrastructure to transact. For organisations operating in cash, the outage also signals the need to ensure robust yet adaptable operations in forecasting, reconciliation and all cash functions.
