A widespread power outage across Spain and Portugal on Monday paralyzed electronic payment systems, leaving businesses and consumers stranded and underscoring the vulnerabilities of a cashless economy.
The blackout disrupted critical services, including public transportation, hospitals, and manufacturing across the Iberian Peninsula. According to the Spanish newspaper El País, the outage crippled banking and payment systems, with only a few banks able to process transactions through their point-of-sale (POS) terminals. Bank branches and ATMs were largely shuttered.
The Bank of Spain reported that, by 3:30 p.m. local time, the national and cross-border payment systems had returned to normal operation. It attributed lingering issues to a lack of backup power for bank branches, merchants, and consumers. At retail locations, many POS terminals became inoperable after their batteries were depleted.
Spain’s push toward a cashless society has been driven in part by Prime Minister Pedro Sánchez, who has sought to curb tax evasion by reducing cash transactions. In 2021, Spain lowered the limit on cash payments for businesses from €2,500 to €1,000. Despite these efforts, cash remains prevalent, accounting for 57 percent of retail transactions, according to European Central Bank data. Approximately 39 percent of non-online payments in Spain are made via card or mobile apps.
The outage exposed the fragility of cashless systems, a concern echoed beyond Spain. Last month, Sweden’s central bank, the Riksbank, urged citizens to keep physical currency on hand for emergencies, citing resilience amid a “deteriorating security situation,” an apparent reference to regional tensions involving Russia.
The incident follows a recent equipment failure that disrupted the European Central Bank’s TARGET system for wholesale payments for several hours. The ECB noted that the eurozone’s core financial infrastructure continued to function normally during that event.
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