Opinionfinancial analyst
Digital banking might make life easier, but when an app goes down, having money in your account is no guarantee you can access it. Some backup cash is always advisable.
Nick Charalambous
YOUR SHOPPING IS packed. You know you have money in your account; you tap your phone to pay, but nothing happens.
You try again and still nothing. Then you realise you have no cash and no way of paying for what is sitting in front of you.
For some Revolut customers, this week’s outage turned that scenario into reality. Customers in Ireland were among those experiencing difficulties accessing accounts, and making payments and following disruption linked to Google Cloud.
Revolut said customers’ money and data remained safe and that reassurance matters, but when you are standing at a checkout, there is another immediate concern: how are you going to pay?
I heard firsthand of a woman in Dunnes Stores who during the outage had to leave her shopping behind because she relied entirely on Revolut from her phone. When it stopped working, she had no alternative.
It was an everyday situation, but it raises a question many of us probably haven’t considered: if your usual payment method failed right now, what would you do?
When convenience becomes dependence
Digital banking has made managing money so much easier. We can transfer money in seconds, check our spending or split a restaurant bill before anyone has left the table. I use these services myself and it’s great!
But it’s easy to become so comfortable with that convenience that we stop thinking about a backup. We leave the wallet at home because everything is on the phone. Then the battery dies, or like this week a banking service stops working.
Suddenly, having money and being able to spend it become two very different things. For a parent, that is particularly concerning when a child or teenager is relying on their phone for everyday spending; would they have another way to pay for lunch or know what to do if a payment was declined?
Giving them a small amount of emergency cash, kept somewhere secure, is a practical way to prepare them for that situation. It also opens up a useful conversation about managing money.
A backup needs to work independently
My advice is straightforward: if you can afford to, keep a modest amount of cash available for unexpected situations. Depending on your circumstances, €20 or €50 could cover an essential purchase when a payment service fails.
A physical card linked to another bank can also be useful, but the detail matters here. A physical Revolut card and Revolut on your phone may both be affected by the same outage, and having both doesn’t necessarily give you an independent alternative.
Equally, two cards stored on the same phone won’t help much if that phone is lost or out of battery. Another bank card adds an option, although wider payment or infrastructure problems can affect several providers at once. Some cash gives you an additional fallback where it is accepted.
What cash stuffing gets right
There is an interesting connection here with “cash stuffing”, the budgeting approach associated with social media in which people divide physical cash into envelopes for different expenses.
One envelope might cover groceries and another entertainment. You can see why this is appealing because you can see what you have left. Spending becomes tangible, and each purchase reduces the amount available in front of you.
It won’t suit everyone, but plenty of people find banking apps much more useful for tracking their money. However, you don’t have to organise your entire budget into envelopes to see the value of keeping a little cash to hand. Money set aside for an emergency is useful only if you can access it when that emergency happens.
An emergency way to pay
As a financial adviser, I regularly talk to people about building an emergency fund. That remains an important part of financial planning. The Revolut disruption raises a more immediate consideration: having an emergency way to pay.
There is no need to withdraw large sums or make complicated changes to your banking. We are not talking ‘wads of cash under the mattress’. Just ask yourself, could I cover an essential purchase if my usual app, card or phone stopped working?
If the answer is no, it is worth putting a backup in place. Digital banking will remain part of everyday life, and for good reason. But a little cash in your wallet and another way to pay could save you a lot of trouble.
Especially when your shopping is already packed!
Nick Charalambous is managing director of Alpha Wealth.