Square Payment System Outage Sends Bay Area Businesses into Crisis

Samantha Miller
  • A nationwide outage of Square's payment system during a busy lunch service at Gumbo Social in San Francisco left numerous restaurants and bars in the Bay Area scrambling for alternatives, resulting in lost revenue and customer frustration.
  • The outage spotlighted the vulnerability of small businesses in the hospitality industry, with owners like Dontaye Ball of Gumbo Social and C-Y Chia of Lion Dance Cafe expressing concerns about the devastating financial impact and questioning their continued reliance on Square.
  • As Square users grapple with the aftermath of the outage and rising fees, there is a growing sense of urgency among business owners to explore alternative payment solutions, emphasizing the need for greater reliability and transparency in payment technology services.

In the heart of San Francisco’s bustling restaurant scene, Gumbo Social found itself in the midst of chaos last Thursday afternoon. The popular Bayview restaurant, known for its delectable gumbo, faced a sudden and unexpected crisis when its payment system, powered by Square, went dark. What followed was a harrowing hours-long ordeal that rippled across the nation, affecting countless businesses and underscoring the vulnerability of the hospitality industry’s reliance on a single payment technology.

As lunch service reached its peak on that fateful Thursday, Square’s payment system suffered a nationwide outage, leaving Gumbo Social and its owner, Dontaye Ball, in the lurch. Approximately 50 customers had to be turned away, resulting in an estimated loss of $1,000 – a significant blow on what is typically the restaurant’s second-busiest day of the week.

Desperate to retain customer goodwill, Ball took a remarkable step by giving away small bowls of gumbo for free. He feared that the outage, which persisted from noon on Thursday, September 7th, until early Friday morning, might deter customers from returning.

However, Gumbo Social was far from alone in facing this predicament. Restaurants and bars throughout the Bay Area that relied on Square to process payments found themselves frustrated and scrambling for alternatives. Some resorted to social media, urging customers to bring cash, while others turned to Venmo, PayPal, or Zelle.

Even Cash App, a mobile payment service under Square’s owner, Block, was affected. This widespread disruption prevented many businesses from accepting online takeout orders, compounding their financial losses.

Viet Pham, a Food Network star and restaurant owner in Salt Lake City, shared on social media that he lost nearly $18,000 in sales due to the outage. Meanwhile, Leaning Tower, a pizzeria and bakery in Oakland, had no choice but to shut down entirely while Square remained offline.

The incident laid bare the perilous dependency of the hospitality industry on a single payment technology, exposing smaller businesses to more severe consequences. Dontaye Ball expressed, “the impact on you is more devastating than typically the bigger businesses.”

In response to the crisis, Square issued a statement on social media, offering apologies for the disruption and pledging to conduct a comprehensive review to prevent such incidents from occurring again. However, the company has yet to disclose the root cause of the outage.

Business owners have also called on Square to waive some of its fees for the affected establishments, acknowledging the financial burden placed on them during this ordeal.

Dontaye Ball, a loyal Square user since his pop-up days, initially viewed the company’s card reader and services as a boon for small businesses. However, the outage shattered his trust in the system.

The repercussions extended beyond payment processing. Many local restaurants also relied on Square for marketing services, invoices, and payroll. C-Y Chia, co-owner of Lion Dance Cafe in Oakland, learned of the outage when employees couldn’t log into Square’s time card system. As the hours passed, panic set in.

Gumbo Social, like many others, depended on Square for marketing and payroll services, leaving employees unpaid on time. Adding insult to injury, Ball received a bill from Square during the outage, further aggravating the situation.

Some business owners, faced with uncertainty, decided to record offline transactions, hoping they would eventually process when Square resumed operations. Although Square announced that it was processing offline payments on Friday morning, delays were anticipated in completing these transactions, as well as in transfers and billing updates.

To compound the frustrations, Square had recently raised its processing fees, leaving business owners like C-Y Chia of Lion Dance Cafe feeling that they were paying more for less.

Chia remarked, “We’re forced to work with companies like this that take so much of our money and do less than the minimum they say they’re going to do in return. That’s just a huge frustration and it’s one of the many things that make it unviable right now for small businesses.”

The outage has ignited a sense of urgency among businesses like Lion Dance Cafe to explore alternatives to Square’s point-of-sale system, highlighting the need for greater reliability and transparency in payment technology services.

As the dust settles on this ordeal, business owners are left pondering their future relationships with Square and the broader implications of relying on a single payment platform in an increasingly digital world.

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Samantha Miller is a business and finance journalist with over 10 years of experience covering the latest news and trends shaping the corporate landscape. She began her career at The Wall Street Journal, where she reported on major companies and industry developments. Now, Samantha serve as a senior business writer for Modernagebank.com, profiling influential executives and providing in-depth analysis on business and financial topics.
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