Federal Reserve payments outage raises system-wide stability questions

A series of payments systems operated by the Fed went down for several hours on Wednesday due to an “operational error,” affecting multiple services, including the automated clearinghouse system (FedACH), a lifeline that connects financial institutions sending electronic credit and debt transfers.

Why should we care?
The Fed payments outage – which affected Account Services, Central Bank, Check 21, Check Adjustments, FedACH, FedCash, FedLine Advantage, FedLine Command, FedLine Direct, FedLine Web, Fedwire Funds, Fedwire Securities, and National Settlement – underscores stability challenges within the Fed’s payments infrastructure as it plans to add new services. FedACH processes payroll, social security benefits, tax refunds, corporate payments, and utility payments. FedNow is a yet to be launched payment system that will be run by the Fed and will allow for same-day settlement. It will be a direct competitor to a real-time payments system run by a consortium of banks. The Fed provided few details about what caused the outage, citing an “internal technical issue.”