In response to recent undersea infrastructure damage and rising geopolitical tensions, Finland, Sweden, Norway, Denmark, and Estonia are making strides to develop offline card payment systems. This initiative aims to ensure uninterrupted payment capabilities during times when internet connectivity is compromised. Sweden, in particular, has set a deadline for implementing this system by July 1, 2026, for essential transactions, aiming to support outages lasting up to seven days.
While this may seem like a necessary precaution in the face of unexpected internet disruptions, it also raises critical questions about how reliant we have become on digital payment infrastructure—and what this means for the world of corporate treasury.
Why Are We So Dependent on Digital Payment Systems?
Corporate treasury operations have become deeply intertwined with technology. From managing liquidity to handling payments and foreign exchange, everything today operates through highly integrated, tech-driven systems. As businesses scale and grow globally, online payments have streamlined processes, improved cash flow management, and reduced errors that might arise from traditional, paper-based systems. Technology allows companies to connect with banks and financial institutions across borders, using platforms that support real-time transactions, instant payments, and automated treasury management systems (TMS).
However, as we place more trust in these systems, we also increase our vulnerability. A disruption to internet connectivity or technical glitches can cause immediate ripples throughout the business world. In fact, the pandemic showed us just how vulnerable we are when systems fail or become compromised. The dependency on tech-driven payment systems makes any disruption in connectivity a potentially catastrophic event for global businesses.
The Risk of Being Too Reliant on Tech
One key lesson to draw from the Nordic countries’ shift to offline card payments is the recognition of just how fragile our digital infrastructure can be. Financial institutions, payment systems, and even our everyday business functions are tied to internet connectivity. The reality is that without access to the internet, treasurers may find themselves unable to access funds, settle payments, or execute critical financial transactions. For corporate treasurers, this reliance creates a scenario in which liquidity management, treasury reporting, and cash flow forecasting could become severely compromised.
For businesses, this means that disruptions could affect everything from employee payroll to vendor payments and even customer transactions. The possibility of a system downtime lasting hours—or even days—could severely hamper treasury functions, potentially leading to missed opportunities, delayed payments, or even lost business.
Why Treasury Teams Should Pay Attention
Corporate treasurers, responsible for ensuring smooth financial operations and managing cash flow across the business, are becoming increasingly aware of the growing reliance on digital systems. The need for operational resilience has never been more critical. These recent developments in the Nordics are a wake-up call, signaling that businesses must account for offline capabilities in their treasury and payment systems.
Here are a few takeaways for treasurers:
- Contingency Planning: Just as treasury teams plan for FX volatility or interest rate changes, they must also develop strategies for potential disruptions in payment systems. Identifying fallback options or offline payment systems (like the ones being developed in the Nordics) could ensure business continuity in case of connectivity disruptions.
- Diversification of Payment Channels: Relying solely on a single payment processor or digital system could leave a company vulnerable. Having multiple channels and backup systems in place can prevent a critical failure if one system goes down.
- Investing in Resilience: Incorporating resilience into treasury operations is more important than ever. Treasurers should explore the feasibility of integrating offline systems, alternative payment methods, or even physical cash options when necessary.
- Tech Risk Management: While most treasury functions are becoming increasingly automated and digital, it’s essential to consider the risks that come with over-reliance on these systems. Regular risk assessments and audits can help identify vulnerabilities in payment channels and ensure preparedness for worst-case scenarios.
The Bigger Picture: Geopolitical and Infrastructure Risks
The recent efforts by Nordic countries are not only driven by technological considerations but also by the broader geopolitical environment. Geopolitical tensions and infrastructure vulnerabilities, particularly in undersea cables, are increasing the potential for disruptions. Treasurers need to stay ahead of these risks by not only investing in backup systems but also by monitoring geopolitical developments that could impact their payment infrastructure.
Conclusion
As the world becomes more interconnected through digital systems, businesses must ensure that their treasury operations are resilient enough to handle disruptions. The efforts of the Nordics and Estonia to develop offline card payment systems should serve as a reminder of the importance of planning for system failures in an increasingly tech-dependent world. For corporate treasurers, the time has come to reassess risk management strategies and ensure that payment systems—both online and offline—are integrated and prepared for whatever disruptions may arise.
In the end, the question is not just about building smarter, more efficient payment systems; it’s about preparing for the times when those systems fail, and ensuring that business continuity is maintained in every scenario.
Also Read
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