US Fed payment services disrupted for hours due to 'operational error'

Fedcash and Fedwire Funds suffered widespread disruption for four hours

The US Federal Reserve's online payment services, including Fedcash and Fedwire Funds, suffered a widespread disruption for about four hours on Wednesday, in what appeared to be some sort of technical glitch.

"Beginning around 11:15am Eastern Time (ET), Federal Reserve Bank staff became aware of a disruption for all services. Our technical teams have determined that the cause is a Federal Reserve operational error", the US central bank said in a statement on its website.

The outage was resolved at 2.17pm ET, the Fed said in an update, adding that it had "taken steps to help ensure the resilience" of Fedwire and national settlement service applications.

The Federal Reserve is the Central Bank of the United States, with responsibility to set monetary policy, supervise the country's largest banks and promote stability of the US financial system. The Fed also provides a range of financial services to banks and other financial institutions across the country. Its Fedwire system is used by banks, government agencies and businesses in the US to transfer huge sums of money around the US banking system.

The Wednesday incident follows two major disruptions to the Fed's payment services in 2019. According to the Fed, there was no indication that Wednesday's disruption was the result of a cyberattack.

The outage resulted in a backlog of payment files at banks, and the Fed told its clients that the backlog might take time to clear.

Fedwire Funds Service was one of the major services taken offline as a result of the 'operational error', according to the Wall Street Journal. This "premier electronic funds-transfer service" is used by entities for same-day transactions, submitting tax payments, settling positions with other institutions, among other activities.

Other services affected included Fedwire Securities, which provides settlement and transfer services for securities, and automated clearing-house network FedACH, which enables debit and credit transactions.

Fed's central bank programme was the first to be restored at 2:17 pm ET, followed by Fedwire and FedACH that were back shortly before 3 pm.

In a statement to banking regulators, the Treasury Department said that the disruption "required a reboot of servers impacting all payment channels".

"The Federal Reserve banks have taken steps to help ensure the resilience of the . . . applications, including recovery to the point of failure," the Fed told clients of its payment system.

"Nevertheless, it is critical that you reconcile the messages you believe you had sent or received through the services after waiting several minutes for the backlog of messages to finish processing before you submit additional messages."

In 2019, the FedWire interbank funds transfer service suffered disruption for about three hours. At the time, the Fed blamed "an internal technical issue" for disruption, but declined to provide more details about the incident.

In 2013, the Fed admitted that it was hacked during Sunday's Super Bowl, with hacktivist group Anonymous claiming responsibility for the attack.

The Fed said at that time that no lasting damage was done, with nothing of value accessed or stolen by the hackers.