Visa's Recent Outage Shows How Easily Your Electronic Money Can Be Frozen

Imagine heading home from work on a Friday, visiting your local grocery store to do some shopping. Maybe you’re there to buy dinner, food for the week, items for your child, medication, etc.

Or perhaps you’re stopping by the gas station to fill up your tank for the long trek home.

Now imagine your Visa debit or credit card ceasing to work. For reasons unknown, the vendor’s system simply won’t accept it.

You call your bank for an explanation, and although they may know the source of the problem, there’s nothing they can do about it; it’s up to Visa to fix it, and the fix has no estimable ETA.

Now, what if you really needed to buy something important, such as medication? Or what if you were out of gas and needed to fill up?

Obviously, you need cash. But you’ve been living in a convenient “cashless” mode for quite some time, as you have always had quick and easy access to your money via electronic payment system.

But now you can’t access your money. No matter how much money you have in your account, or how much credit you have to borrow, it has all been rendered useless.

This is not a fictional scenario; it actually happened Friday, June 1st across the entire European Union.

Millions of people were left without the means to purchase anything using their Visa debit or credit cards.

There was no cyber attack; no unauthorized access. Visa simply experienced a system crash. A moment of “oops, something went wrong.”

Regardless, the error’s impact on Visa was far less than its impact on millions of individuals, particularly those who didn’t have any cash (or other non-Visa cards) handy.

There are two things that are disturbing about this scenario:

• First, one company stands as a gatekeeper to your money; and
• Second, one system crash can render your money unusable.

This comes to show you that a “cashless system” may be more stable and convenient, but it also presents dire risks should the system freeze or collapse.

“I’ve only got two cards and they’re both Visa. I tried to buy my tea in...a cafe but they were both rejected. I don’t know what I’m going to do. It’s a long journey home with no food,” says Lisa Eagleton-Muir, who traveled to London from Newcastle for an audition.

Visa’s response: “The issue was the result of a hardware failure. We have no reason to believe this was associated with any unauthorized access or malicious event.”

Thanks, Visa!

Americans may not have been affected by this short-lived debacle, but it shows us just how vulnerable we are to banking institutions in a cashless system.

Here are a few questions to ask yourself:

• Do you mind that access to your money may be monopolized by one company? (In the above case, it was Visa.)

• Are you concerned that access to your money is being monopolized by a single electronic transaction system? (Just think of what happened to Puerto Rican citizens who couldn’t access their money after Hurricanes Irma and Maria.)

Bear in mind that the Visa outage was merely a warning of worse things that can and (at some point in the time) will happen.

All electronic systems are subject to breakdowns and errors; all are vulnerable to “bad actors” with an intent on hacking the system for personal gain; worst of all, in times of “national emergency” electronic monies are subject to government monitoring, taxation, and confiscation.

Fortunately, our government hasn’t been so direct and brash as to implement the last point. Instead, the government has been confiscating your funds through more subtle means, by excessively printing money and running an increasing federal deficit; both of which dilute your purchasing power.

But should things get worse, should electronic infrastructure collapse, or should it be turned against its own citizens, how might you protect yourself?

Only your privately-stored cash, physical gold, and physical silver can weather the storm. But unlike cash, only physical gold and silver are immune to monetary erosion.

Isn’t it time that you hedged at least some of your hard-earned wealth?