A technical snag in the payment processing network on Friday led to a ripple of deposit delays across multiple US banks, as reported by the Federal Reserve.
The glitch was rooted in the operations of The Clearing House’s Automated Clearing House (ACH) system—an essential financial conduit responsible for the seamless transfer of electronic payments between banking institutions.
Automated Clearing House hits a bump
The ACH system, a critical infrastructure for the daily flow of funds, from payroll disbursements to utility and mortgage bill settlements, faced a hiccup due to a processing error with a transaction batch.
The Clearing House, overseeing the ACH network, conveyed to CNN that the incident affected a minor fraction, less than 1 per cent, of the ACH’s daily transaction volume in the country.
They reassured that measures were in place to address the concerns of the affected financial institutions and their customers, emphasizing that the rest of the ACH operations were unhampered and proceeding as normal.
Industry insight and response
According to CNN, an industry source reported that the disruption was not confined to any single banking entity.
Reports are that The Clearing House’s representative, Greg MacSweeney, identified the root cause as a “manual error,” distancing the event from any cybersecurity threats.
He further assured ongoing collaboration with the impacted banks to navigate the aftermath of the error.
Impact and customer reaction
The Federal Reserve made it known to the banking fraternity on Friday that a “processing issue” at ACH was the perpetrator of the delayed transactions.
Meanwhile, major banking players including Bank of America, Chase, US Bank, Truist, and Wells Fargo were flagged by customers experiencing delays, as captured by the monitoring service Downdetector.
The snag provoked a wave of customer dissatisfaction, which spilled over onto social media platforms as bank clients aired their grievances regarding the unforeseen inconvenience.
