Who will be the Colonial Pipeline of payment services?

The payments sector likes to use the terminology of utilities. Payments are the “plumbing” of the financial system. Market participants are connected by “pipes”. It is the payments “infrastructure” which settles payment transactions.

So payments firms are justified in their trepidation when they see headlines like “Cyber attack shuts major US pipeline system”. In this case the pipeline was for petrol, not payments. But the fact that operations at Colonial Pipeline have been shut down by a ransomware attack is yet another warning for businesses in other critical sectors, including payment services.

Here in the UK the financial services regulators want payment providers and other financial firms to prepare for this type of disruption in a new way. We are speaking to our clients about their plans to meet incoming rules on operational resilience. Yes, they want to comply with the new rules. But above all they want to make sure they can withstand a Colonial Pipeline-style outage whether it comes from a hack, or the payments equivalent of a burst pipe…