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Challenger bank Monzo knocked down by card processor outage

Bank’s customers unable to make transactions as third-party card processor systems go offline

Challenger bank Monzo was offline on Sunday 5 March when its third-party card-processing service provider went offline during a large migration.

During its early stages, Monzo has used a third-party card-processing company, such as Mastercard, for all its transactions. When the card processor went offline on Sunday, customers were unable to process transactions.

During the outage, Monzo told its customers: “One of our suppliers needs to run an unexpected large migration and we are waiting for further information. We don’t have a firm estimate when this will be completed and suggest everyone uses another card today.”

Startup finance firms can connect to payment networks quickly through third-payment processors but, like any outsourced service, they are at the mercy of the supplier’s systems. Monzo said in a statement to customers: “Using a third-party processor made a lot of sense when we first started our alpha programme – connecting directly to payment networks like Mastercard is a long, costly and complex process, and at the time it didn’t seem like there would be any benefit to our customers from doing this.”

But the bank said it was currently moving to direct access to payments networks. “To ensure we have total control over the customer experience, we need to have a direct connection to payment networks,” it said.

Monzo said it had just completed a project to connect systems directly to Mastercard and added: “When we launch the current account later this year, it will not use a third-party card processor and instead transactions will be processed entirely on our own technology.

“We see ourselves as a technology company as much as a bank, and going forward, our strategy is to bring all critical systems in-house and continue to develop our own platform atop modern technology which we control.”

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