Retailers fear checkout chaos if there is a power shortage

Electronic payment transactions would collapse without electricity: its association has thereby warned the major retailers in a letter. The Coop, for example, is now taking precautions: if the card payment system isn’t working, customers can pay for their purchases later.

If the power fails, nothing works anymore, not even the checkout in the supermarket. Retailers want to prevent such a scenario at all costs and are therefore working at full speed on emergency plans in view of the possibility of power shortages in the winter. The focus is on the question of how customers can pay for their goods in the event of a failure of the electronic payment system. In order to avoid chaos at the checkout counters, the Coop is now relying on a method that used to be very popular: customers can have their purchases "written down", as they used to do in the village shop, and pay their bill later.

"We have recently started offering the option of having payments put on hold in case of card payment failures. By providing their personal details at the point of sale, customers can then pay the outstanding amounts within three days," says a spokeswoman in response to an enquiry from CH Media. In addition, they are also in a dialogue with the federal government and have submitted proposals for continuing to fulfil the supply mandate in the event of a power shortage.

Migros preparing for offline payments
Migros has also set up a national crisis team and offers "the possibility of offline payments at the payment terminals in the event of disruptions", according to a spokesperson. These offline payments should be possible up to a certain maximum amount. The principle: the open amount is stored at the terminal, and the data transmission and billing can take place as soon as the power and the network connection are back. Which customers can use this solution depends on the respective card provider.

With the option of the "write-down" system, the Coop is responding in particular to a glitch that paralysed all payment terminals across Switzerland at the retailer a fortnight ago. The disruption showed once again how vulnerable electronic payment transactions are, even in normal operation - widespread card terminal failures have already affected the entire industry in May, June and August.

A power shortage would have far-reaching consequences for payment transactions.          Chris Iseli/AZ
In the event of a power failure, ATMs would also be paralysed.                    Stock photo

The most recent breakdown at the Coop gave customers a foretaste of what could happen if there was a power shortage at the checkouts. It was not a loss of electricity that made card payments impossible at the time, but a technical malfunction. But the effect was the same: annoyed customers, purchases left behind at the self-service checkouts and millions lost for the retailer.

"The system would collapse under the load"

In a recent letter to its members, the Association of Electronic Payment Transactions (VEZ) warned about similar scenes if the federal government were to impose electricity quotas, or even grid shutdowns, in an emergency. The so-called ‘rolling grid shutdowns’ would affect a specific area for four hours at a time. The association, which includes major players such as Coop, Migros, SBB and Swiss Post, fears that payments by card or mobile phone would be completely or partially cancelled, even with electricity quotas.

Things look particularly bleak for the trade if there are grid shutdowns. The letter, which was made available to CH Media, states that electronic payment transactions are expected to collapse completely. "Data centres, servers and the necessary telecommunication systems are distributed over different power supply areas. Not all of these are backed up for a full four hours by generators or batteries." Under these conditions, the system could not be operated in a stable manner: "Even if it were still operational in some parts, it would collapse under the load."

This means that if there are even partial losses of powers, there would be a threat of payment chaos throughout Switzerland. This would have massive consequences for the companies, which would suffer serious losses in turnover. Consumers could fall back on cash in the short term. But here, too, there is a threat of collapse without electricity. "Cash transactions have long since been digitalised, and are dependent on electricity," the association states. And ATMs will not deliver cash if there is no electricity, as they are also linked to electronic payment transactions. If the electricity crisis lasts longer, the VEZ fears that customers will run out of cash,.

The association therefore advises its members to equip card terminals with batteries and SIM cards, to inform customers in good time, and to check the possibility of buying on account.

The Swiss National Bank (SNB) plays a central role in the supply of cash: it supplies the banks with cash, who then take over the fine distribution. An SNB spokeswoman explains that a power shortage is possible, and this poses a challenge for the financial centre. In order to reduce the risks to a "bearable level", the major players are coordinating their actions. "We are in close contact with the Confederation and the Financial Market Authority, and are supporting the preparations of the financial centre."

Emergency power for the operation of ATMs?
It is unclear what concrete measures are involved. The Zurich Cantonal Bank, which is preparing various scenarios, has hardly revealed anything more. It’s a matter of "using the already existing emergency power systems and making savings in electricity consumption". The bank doesn’t want to say whether it will also use its emergency generators for the operation of ATMs if the power fails – and, above all, for which locations. This will be communicated in due course. Presumably to prevent any panic.

The Federal Office for National Economic Supply (FONES) is currently working on the ordinances that will specify exactly how quotas and network shutdowns will be carried out in the case of an emergency. It is questionable whether there will be exceptions for retail trade in the case of grid shutdowns. This very last resort would only be taken if there was a threat of grid collapse, according to the FCA. "Exceptions will therefore only be granted very restrictively, and where technically possible." The Confederation stresses that it is working together with the industry to analyse how to secure electronic payments. "A working group has been formed with representatives of the banking industry to draw up recommendations to the banks."