How Money Transfer Platforms Can Mitigate Downtime Risks
Money transfer platforms holding a single banking line are exposed to that bank’s outages and to the bank closing the line, and UK rules now expect a plan for both. A specialist multi-currency clearing provider offers an answer.
Money transfer platforms and other payment service providers (PSPs) running international payments through a single banking line, the industry’s term for a platform’s account and payment relationship with a bank, lose the ability to pay out whenever that bank goes down or decides to close the line.
A stoppage halts customers’ supplier payments, payroll runs and treasury transfers until the bank recovers or a new line is in place.
The platform carries the reputational damage: customers whose payments miss deadlines move their business elsewhere, and a prolonged outage can end a firm.
Regulators also hold the platform responsible for the disruption, whichever link in the chain broke.
Two risks sit behind a single-line set-up:
- The bank goes down: an IT failure at the bank stops payments at source.
- The bank drops the line: a risk reappraisal or operational decision closes the platform’s accounts, often with little notice.
Bank Outages Stop Payments at Source
Nine major UK banks and building societies recorded at least 803 hours of unplanned IT outages between January 2023 and February 2025, the equivalent of 33 days, according to data published by Parliament’s Treasury Committee.
The banks reported at least 158 incidents, citing problems at third-party suppliers, disruption from system changes and internal software faults.
Barclays suffered a separate outage from 31 January to 2 February 2025, during which 56% of online payments failed after its mainframe processing degraded severely.
A platform with its only banking line at the affected bank has no route for its customers’ payments until the bank restores service.
Banks Drop Lines With Little Notice
Banks also close banking lines on their own terms.
The European Banking Authority (EBA) names payment institutions and e-money institutions among the sectors hit hardest by de-risking, the practice of banks ending or refusing relationships with whole categories of customer.
Payment firms told the EBA that banks applied “blanket exit policies” to the whole sector, and that firms with eight to ten year relationships were given one or two months’ notice.
The reasons banks give range from risk appetite and the cost of compliance to a lack of expertise in the firm’s business model, and the decisions were often “irrevocable, without an opportunity of appeal or review.”
Losing a banking line can lead to “severe business disruptions and ultimately to business closure,” says the EBA.
UK firms cite non-specific financial crime concerns and reputational risk among the main reasons for closing accounts, according to the Financial Conduct Authority (FCA).
The pool of banks offering international lines is shrinking: the number of active correspondent banks, the banks that carry cross-border payments for others, fell about 22% between 2011 and 2019, according to the Bank for International Settlements.
UK Rules Expect a Plan
The FCA’s tighter safeguarding regime took effect on 7 May 2026, adding daily checks on safeguarded funds, monthly reporting and stronger planning for firm failure.
Those rules sit alongside the FCA’s operational resilience framework, which requires firms to keep important business services within set tolerances for disruption.
What Redundancy Looks Like
A resilient set-up has three layers:
- A second banking line: already onboarded, tested and funded before it is needed.
- More than one route per currency: so an outage or closure at one bank leaves payments flowing through another.
- Portable funds: money held in named, safeguarded accounts, so a failure or closure at one bank does not trap client money.
Two Banking Lines Means Twice the Overhead
A second banking line carries its own costs.
It means a second due diligence process, a second integration to maintain and liquidity split across two accounts, which leaves capital idle on both sides.
Until recently, most money transfer platforms operated on a single banking line, according to Gary Howes, who led client FX strategy at UK money transfer firm Horizon Currency between 2018 and May 2026.
The cost of a second line explains why: platforms weigh a certain overhead against an outage or closure they have not yet suffered.
Clearing Specialists Are Built With Redundancy in Mind
Clearing specialists build that redundancy into their own infrastructure, so the platform holds one relationship while several banking routes run underneath.
These specialists exist to build the capacity and hold multi-currency infrastructure while offering it to payment services providers via a single platform. At a stroke, the multi-bank redundancy question is removed.
Lorum, the multi-currency clearing and correspondent institution, runs a backup provider on its sterling and euro rail, so a failure on one route moves flows to the second.
Lorum describes its model as narrow banking: client funds are held in full and are not lent out, so its balance sheet carries no lending risk.
The case for the model rests on incentives rather than bank failure. A traditional bank earns from its balance sheet by lending out deposits, so holding funds can pay better than releasing them, and clearing comes second to managing the loan book. "You cannot optimise for yield and velocity at the same time," says Lorum.
Platforms respond by prefunding correspondent accounts against unpredictable settlement times, which ties up significant liquidity. Lorum cites estimates from Oliver Wyman and SWIFT of more than $5 trillion trapped in nostro and vostro prefunding globally, money parked in accounts at other banks to cover payments before they settle.
A clearing institution with no lending book earns only from moving funds, so its incentive runs towards settling payments quickly, while the backup provider addresses the operational failure.
Data from iBanFirst’s 2026 payments barometer shows how many banks an international payment passes through.
The average cross-border payment passed through 1.8 intermediary banks in 2025, and every one is a link that can stall.
Some 75% of payments sent over SWIFT reach the beneficiary bank within ten minutes, while 80% of total processing time is spent waiting for the receiving bank to credit the funds.
The Clock Runs to 2027
The G20 has set a target for 75% of cross-border payments to reach the recipient within an hour by the end of 2027, with the rest settled within one business day.
Platforms offering hour-long delivery on currency payments will need a second banking route already live to meet that standard through the next bank outage or line closure.
The Lorum Redundancy Checklist
Money transfer platforms can test their own set-up against the following questions.
What is a banking line for a money transfer platform?
A banking line is a money transfer platform’s account and payment relationship with a bank, through which it sends and receives customer payments. A platform with a single banking line depends on one bank for every payment it processes.
What happens if a money transfer platform’s bank goes down?
Payments stop at source until the bank restores service. Nine major UK banks and building societies recorded at least 803 hours of unplanned IT outages between January 2023 and February 2025, according to the Treasury Committee, and 56% of online payments failed during Barclays’ outage from 31 January to 2 February 2025.
What happens if a bank closes a money transfer platform’s banking line?
The platform must move its payment flows to another bank within the notice period, or stop paying out. The European Banking Authority found payment firms with eight to ten year bank relationships were given one or two months’ notice, and warns that losing an account can lead to business closure.
Why do banks close the banking lines of payment firms?
Banks cite risk appetite, the cost of compliance, financial crime concerns and reputational risk. The European Banking Authority found many banks applied blanket exit policies to payment institutions and e-money institutions as a sector, and that decisions were often irrevocable, with no appeal or review.
How does a money transfer platform build banking line redundancy?
By using a specialist multi-currency clearing and correspondent institution, the platform partners with an in-built redundancy answer.
How long should a payment stoppage last before customers are affected?
Each platform sets its own limit for each payment service. The Financial Conduct Authority’s operational resilience rules require firms to keep important business services within set tolerances for disruption, and to plan for the scenarios that would breach them.
What notice period applies when a bank ends a banking relationship?
The notice period is set by each banking agreement. Platforms should know the notice period in every agreement and hold a plan to move their flows to a backup line within it.
How often should a money transfer platform test its backup banking line?
Run a failover test at least once a year, and record how long the switch to the backup line takes. A backup line that has never carried live payments is untested.
What does a clearing specialist’s balance sheet model mean for client funds?
A clearing specialist on a narrow banking model holds client funds in full and does not lend them out, so its balance sheet carries no lending risk. Lorum operates on this model and runs a backup provider on its sterling and euro rail.
What should a money transfer platform tell customers during an outage?
Prepare outage communications before one happens, covering which payments are affected, the expected recovery time and the backup arrangements in place. The Treasury Committee said banks must ensure customers are kept informed throughout an outage.