Third-party glitch disrupts services of two popular challenger banks

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The payments processor Galileo said Thursday it suffered an "operational incident" that caused more than 24 hours of outages at the fintechs Chime and Varo Money.

Galileo in recent years has morphed into a company that provides application programming interfaces for a variety of fintechs, including Chime and Varo.

Chime’s outage started Wednesday and continued into Thursday. Customers tweeted complaints about declined debit card transactions, the inability to withdraw cash at ATMs and the failure of the bank’s mobile app to deliver notifications about certain types of transactions.

“Card transactions and ATMs are online,” Chime tweeted Thursday morning. “Notifications for card transactions are also online.”

However, the tweet said the company was still working to restore access to SpotMe, a Chime overdraft protection tool that allows eligible customers to freely overdraw their accounts by as much as $100 without penalty or declined purchase.

Chime was also still trying to restore its "ability to displace account information in the Chime app and website,” it tweeted.

Chime and Galileo said no customer information was compromised during the outage.

“Our team is taking this matter seriously, and we understand our significant responsibility to our clients and their customers,” Galileo said in a statement. “We are committed to actively resolving the situation and returning to normal operations as quickly as possible.” Galileo said later that a "small number" of its clients, including Chime, experienced outages; it did not name any of the others.

Varo experienced a minor disruption in processing that resulted in short delays for some of its customers, according to a statement from Wesley Wright, its chief operating officer.

“These issues are now largely resolved,” Wright said. “Our team immediately responded to the processing glitch, working with customers to ensure any disruption to their banking services was minimal.”

Galileo on Wednesday had announced a $77 million Series A funding round.

The incident goes to show that digital-only banks that rely on third-party providers for some services can run into the same problems as traditional banks.

In February, a breakdown at a power facility in Minnesota led to an extended outage at Wells Fargo, when construction dust set off a fire suppression system. Last year, a 10-day outage ensued after TD Bank botched an online banking upgrade.

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Digital banking Varo Money CHIME
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