Green Dot's Walmart outage should scare all retailers

A grim reminder of how interconnected the payments world is these days


When shoppers at Walmart ran into a wide range of problems using their Green Dot/Walmart MoneyCard cards at Walmart—including checking balancing and accessing funds—last week, it was a grim reminder of how interconnected the payments world is these days and how retailers will be blamed no matter whose fault it is.

On Wednesday (May 18), the blame game began. Walmart blamed Green Dot, which handles transactions and processing for the Walmart MoneyCard, a reloadable prepaid card. Green Dot then took to Twitter to blame MasterCard and specifically MasterCard Payment Transaction Services.

"Our transaction processing partner (MasterCard) is experiencing slowdowns in some of their systems and, as a result, we are currently unable to provide card balances online or over the phone. However, cardholders can get their balances through our mobile apps. We hope to have the balance inquiry functionality restored shortly," the Green Dot tweet said. "We understand the important role we play in the daily financial lives of our loyal customers and apologize for any inconveniences this may cause."

The Green Dot tweet also said something that some customers have disputed. "There is no impact to the ability to make purchases or get cash from ATMs and deposits and reloads are all posting properly," the tweet said.

A couple of days later, Green Dot tweeted again, seeming to contradict that earlier sentence. On Saturday (May 22), Green Dot said the MasterCard glitch "caused a number of different problems with our prepaid cards. While most customers were not impacted, we know that some customers had cards with incorrect balances and other cards had statements that showed the same transaction listed more than once. Many customers also had trouble checking their card balance." Customers were told that,If they had a card that was declined because of the technology glitch, they would be getting an email.

If all deposits and reloads were posting properly, as the first Tweet said, why would any transactions be "declined"?

Also, this is indeed a prepaid card. If it's showing the wrong balance—or refusing to show any balance—that alone would cause many shoppers to wisely opt to not use that card. In effect, they wouldn't have access to their money. And repeated charges for one transactions—meaning that they were charged for things they didn't buy, which would presumably lower their balance needlessly—is no small matter.

But the big takeaway for retail is the blame game. Just as Walmart blames Green Dot, which in turn blames MasterCard, shoppers won't bother to do any of that. To them, they went into Walmart and couldn't make a transaction. Hence, it's Walmart's fault. That's the reality for all retailers, but Walmart is in especially deep with this one, since the name "Walmart" is right on the card. Hard to hide behind Green Dot or MasterCard with your logo screaming out from the plastic.

Even with less direct connections, this is the unpleasant fact of life for merchants today. All of these various digital payment options—and, yes, this includes Apple Pay and Google Pay and Android Pay and Samsung Pay and Walmart Pay and Target Pay and the various combos, which I'll just call FUBAR Pay—end up in the same place. If a consumer is trying to buy things at Walgreens or Home Depot or Footlocker and the supported payment method fails, the shopper will his friends that "there was a problem paying at (name of merchant)."

On the one hand, it's good to accept as many payment methods as possible. That assumes, however, that they all work as advertised. When doing your due diligence on a payment method, think beyond revenue share and interchange and which demographics this payment method (such as PayPal) will bring in. Think in terms of uptime and tech support. If you tell shoppers that you support payment method No. 9 and it doesn't work, it's your reputation that will be hurt on social media.

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