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A global outage at Mastercard has highlighted the risk of over-reliance on international card schemes — something the European Central Bank (ECB) has warned of in its push for homegrown alternatives.
On Sunday (March 9), Mastercard was hit by a major one-day outage that affected customers in 65 countries, according to data from DownDetector.
Throughout the day, Mastercard-holders reported that their transactions were being declined, with both debit cards and credit cards affected.
Impacted jurisdictions included the US, Japan, France, Italy, Thailand and Australia.
Speaking with Vixio, Mastercard gave little indication of the cause of the outage or the number of card-holders or merchants affected.
“We’d simply note that there was a period of time early on Sunday in which some Mastercard transactions were declined,” said Seth Eisen, senior vice president of communications at Mastercard.
“The situation has been resolved and all systems are working normally.”
A lesson in payments sovereignty?
According to DownDetector, a significant number of complaints were made by Mastercard-holders in Australia.
Commonwealth Bank (CBA), the country’s largest issuer and largest acquirer, received complaints from Mastercard debit and credit cardholders, including those who use Google Pay or Apple Pay.
Merchants in Australia also took to social media to complain, noting that although Mastercard transactions failed at their point of sale (POS) terminals, eftpos transactions went through.
As sources told Vixio, one of the silver linings of the outage was that it highlighted the importance of eftpos, Australia’s domestic debit network, as a fallback for when the international schemes fail.
Brad Kelly, co-founder and board member at Australia’s Independent Payments Forum (IPF), said that eftpos had “saved the day” for merchants that were using least-cost routing.
“Mastercard was taken down in a major outage, but if your acquirer was routing debit transactions to eftpos, then you would not have known,” he said.
In Australia, 90 percent of debit cards are dual-network, meaning that they can process transactions using eftpos in addition to one of the international schemes.
Developed by Australian Payments Plus (AP+), least-cost routing is a technology solution that allows merchants to default to the cheapest available network when accepting debit transactions, which is typically eftpos.
Since 2017, the Reserve Bank of Australia (RBA) has officially promoted the adoption of least-cost routing by acquirers and their merchants.
The central bank has also considered mandating the use of least-cost routing, although for the time being, this option has not been pursued.
Instead, the RBA has published a schedule of “expectations” for firms, encouraging them to roll out least-cost routing in stages and in compliance with specific deadlines.
For example, it has urged firms to enable least-cost routing for e-commerce transactions by the end of 2022, and for mobile wallet transactions by the end of 2024.
As covered by Vixio, Google Pay introduced least-cost routing functionality earlier this week, after Apple Pay introduced the technology on a limited scale in September 2024.
But in the context of the Mastercard outage, least-cost routing was not necessarily required to ensure that merchants could continue to accept debit card payments.
As Vixio heard from one of the country’s smaller payment gateways, the ubiquity of dual-network debit cards means that all debit transactions can be switched to eftpos if necessary.
This can be done whether or not the acquirer and merchant are using least-cost routing — and was done during the outage — but it is a technical intervention that is easier for smaller players to implement.
Observations on payments system resilience
Policy-makers in other jurisdictions will note the Mastercard outage for both its payments sovereignty and its payments system resilience implications.
As the experience of Australia shows, a widely adopted domestic card network can help, but the switch to the domestic network has to take place quickly — or, ideally, automatically — for it to work.
A domestic card network is one option that Europe is currently considering, although this has been on the table since at least 2007, when the Euro Alliance of Payment Schemes (EAPS) was launched.
EAPS, which was tasked with developing a pan-European debit card scheme, was abandoned during the 2010s, but the idea has lived on, and is still promoted by both the European Commission and the European Central Bank (ECB).
Cristine Lagarde, president of the ECB, continues to warn that the EU is at risk if it does not take steps to reshore its payments infrastructure.
She has previously noted that more than two-thirds of European card transactions are made using “companies with headquarters outside the European Union” — a nod to Visa and Mastercard.
"Payments are the backbone of our economy, and Europe cannot afford to be overly dependent on external providers," she told the European Parliament this month.
For Lagarde, the solution appears to be the digital euro, a central bank digital currency (CBDC) that would be developed and supervised by the ECB.
She called on legislators to complete the process that would allow the central bank to move forward on the digital euro project.
“The deadline for us is going to be October 2025 and we are getting ready for that deadline,” she said.
“I think it is critically important, and it now seems more relevant and more imperative than ever before, both on the wholesale and on the retail level.”
