December 30, 1999

Y2K Behind Credit Card Machine Failure

By THE ASSOCIATED PRESS

ONDON -- A Y2K-triggered failure in credit card swipe machines caused frustrating delays for thousands of retailers and customers trying to ring up purchases across Britain on Wednesday.

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The machines, manufactured by Racal Electronics and supplied by HSBC, one of Britain's largest four banks, improperly rejected credit cards because of a failure to recognize the year 2000, a bank spokeswoman said.

Retailers claimed they have so far lost $5 million in sales due to the problem, are reportedly threatening to bring a class action lawsuit against the bank.

The Y2K glitch appeared to be the most serious to come to light in the days leading up to the new century.

Linda Stryker, a public relations executive for HSBC in the United States, said the error should not hit any U.S. credit card swiping machines. She said it was specific to software used in machines in Britain.

The problem started Tuesday when merchants tried to swipe Mastercard and Visa cards through some 20,000 machines and found they were improperly rejected, said HSBC spokeswoman Nicolette Dawson.

Lines grew as retailers were forced to telephone for further authorization. Some merchants resorted to bringing out old manual machines, which produced a carbon copy of the transaction.

The glitch occurred because some of the bank's new swipe card terminals are programmed to look ahead four working days in processing merchant transactions to ensure they are registered within that time period.

When the machines compared Dec. 28, 1999 with Jan. 1, 2000 they failed to function because they read the date as Jan. 1, 1900, said Dawson.

"The problem was with the terminals not the cards," said Dawson. She said the problem was expected to disappear by Jan. 1 because the terminals would be comparing Jan. 1, 2000 with Jan. 5, 2000 -- both in the same year.

Small retailers were supplied with the new swipe machines several months ago and were the worst hit by the computer glitch, said Dawson.

On Wednesday, they vowed to sue HSBC after watching their customers take their business to the big retailers who used different technology, according to a story in The Times newspaper.

"This is the last thing small businesses need when you are taking on big battalions during the sales period," Stephen Alambritis, spokesman for the Federation of Small Business, told The Times.

Of the 20,000 machines, 14,000 are supplied by HSBC and 6,000 by other banks. The software problem is limited to UK machines, said Stryker, the U.S. spokeswoman.

Racal Electronics was unable to explain how the malfunction was missed when the company went over its plans for the year 2000 date change. A Racal spokesman said the problem would affect a maximum of 2 percent of all retail outlets in the UK which accept credit cards.

The so-called Y2K bug stems from programming that expressed years in two digits. Left uncorrected, the problem causes computers and microcircuits to mistake the year 2000 for 1900. Faulty fixes are also a problem and can also cause system failures or corrupt data.

Shopkeepers were advised that in lieu of telephoning for authorization they could process cards by pressing a sequence of keys into the terminals before swiping the card.

An HSBC helpline was set up to help them through the sequence, but some retailers complained they still couldn't figure out how to make their swipe machines function properly.

The Y2K retail disruption came on the same day Britain launched its official bug-tracking Web site -- www.millennium-centre.gov.uk -- to monitor developments in the UK and overseas.

"Although the fault relates to the Y2K bug, it will disappear" Jan. 1, the Bank of England said in a Web site message which referred to the swipe card problems. "This is only a minor glitch. It is typical of the sort of problem that it was expected would need to be dealt with over this period."