BoE takes supervisory action over Visa Europe’s June 2018 service disruption

Maria Nikolova

The Bank of England will be using its statutory powers to direct Visa Europe to fully implement the recommendations of the independent review.

Owners of Visa cards probably remember the service disruption from June 1, 2018, which left many wondering whether they are characters in some anti-utopian movie…

The first reports about the problems emerged during the afternoon of June 1, 2018, in Europe, as Visa card transactions did not work for those trying to pay online or via POS. Those trying to pay via contactless cards had most problems, whereas ATMs quickly ran out of cash and queues formed at banks. Irate passengers could not catch their planes and taxis, nor the subway train to get home. The rush hour became a nightmare for many, especially in the UK, France, Germany and Italy, where the majority of the reports appear to have come from. Around 10pm BST, Visa finally published a long-awaited update stating that the issue was a result of a hardware failure and not a cyber attack. Disruptions continued over the next couple of days, with many Visa card owners having to deal with unprocessed transactions or the fact that they have been charged twice for a single purchase.

Today brought some development to the story, as the Bank of England has decided to step in and take supervisory action in relation to the incident.

BoE explains that, following the incident, Visa Europe engaged an external party to conduct an independent review, with the scope agreed with both the Bank and the Payment Systems Regulator (PSR). A summary of the review’s findings was shared with, and subsequently published by, the Treasury Select Committee in November 2018.

The Bank recognises that Visa Europe has accepted all of the recommendations of the independent review, in full, and is committed to implementing them in a timely manner.

The Bank has reviewed the incident and whether to use its statutory powers under the Banking Act 2009. The incident resulted in widespread disruption to users of Visa Europe’s services and had the potential to affect confidence in the financial system.

Given this, and the importance of ensuring implementation of the remediation actions, the Bank has decided to use its statutory powers to direct Visa Europe to fully implement the recommendations of the independent review. Furthermore, BoE is also using its powers to require Visa Europe to appoint an independent third party, PricewaterhouseCoopers (PwC), to assess Visa Europe’s progress in implementing these recommendations. The Bank sees its action as proportionate to the nature and impact of the incident.

The action taken by the Bank does not imply the breach of a regulatory requirement and does not constitute enforcement action.

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