Eye on Processing: Glitches Strike in U.S., Germany, And Australia

Payment card processing glitches struck in the U.S., Germany, and Australia over the past week. Although full details about them still aren't known, the foreign ones apparently involved applications that couldn't properly handle the change in year on Jan. 1?problems eerily reminiscent of those predicted in the late 1990s during the Y2K hysteria as the year 2000 approached. In the U.S., some customers of CyberSource Corp., which provides gateway and related services for 284,000 merchants, experienced problems submitting transactions through the CyberSource processing software they host on their own computers, according to a spokesperson for Mountain View, Calif.-based CyberSource. In contrast, most of CyberSource's merchants use the company's gateway services for processing their online transactions. The spokesperson says CyberSource was sending a patch to the affected customers, who he says numbered fewer than 20. One of those customers was the 23,000-student Washington State University, which has its main campus in Pullman, Wash., and satellite campuses in several Columbia River Valley cities. John Chapman, IT applications manager at WSU, says the processing outage started in the late afternoon of Dec. 31 and lasted until the university installed the patch on Tuesday. WSU's system processes transactions from 31 sites that take physical card transactions or handle online transactions, including a student recreation center, parking lots, and facilities that take student payments. Chapman estimates that based on the previous week's volumes, the university was unable to process approximately 1,670 transactions worth nearly $93,000. Some of the lost Dec. 31 transactions would have come from donors to the university's foundation that wanted to make an online payment before the end of the day in order to claim a 2009 charitable tax deduction, he says. The university also expected a number of transactions from accepted applicants making $200 reservation payments to enroll for the next school year, payments applicable to their tuition. Instead of going through the CyberSource gateway, WSU's CyberSource Payment Manager system routes transactions to processor TSYS Acquiring Solutions. TSYS informed WSU that the CyberSource software was interpreting its response messages incorrectly. Chapman says he tried without success to get CyberSource to address the problem over the holiday weekend. “They didn't give any attempt to come in and reproduce the error, that's what was frustrating to us,” he says. The CyberSource spokesperson says he had no information about that aspect of WSU's problem but says CyberSource is a “24-7” operation. “We're still investigating” the source of the outage, he adds. Problems overseas, however, seemed to be far larger, especially in Germany. According to various news reports, up to 30 million cards with the EMV chip became unusable at the start of the year. That's when customers of some German banks began reporting problems with ATM withdrawals and card payments. The problem affected so-called electronic cash (EC) or “giro” cards issued by public-sector financial institutions. The cards were unable to recognize the year change. French chip card maker Gemalto, a major chip card supplier, said it would “promptly deploy a solution,” according to the Reuters news service. Banks said they would not have to reissue cards because customers could have them repaired by inserting them into ATMs, but the fix could take a week, according to press accounts. In Australia, some merchant terminals serviced by payment processors Keycorp Ltd. and U.S.-based First Data Corp. and deployed on behalf of two banks on Jan. 1 began recording payments as having occurred in January 2016. Keycorp said the problem originated with its software, according to the ZDNet Australia news service. The fix involved entering a series of keystrokes and took only a few minutes, Keycorp's chief executive told ZDNet. The last problems had been corrected by Wednesday. Technology analyst Aaron McPherson, financial services practice director at Framingham, Mass.-based IDC Financial Insights, says he can't draw definitive conclusions about the German and Australian glitches yet because he doesn't have full details. He does, however, suggest at least one possible source of the problems. “There doesn't seem to be a common element to them except there's a weak link in the chain that was broken by the date transition,” he tells Digital Transactions News. That may indicate the affected software programs' date fields did not have four digits?a flaw discovered in many programs during Y2K preparations a decade ago?or ways to translate smaller date fields into the correct year. “I guess it just speaks to the growing complexity of payment systems,” he says. “It suggests there's been some corner-cutting.” The ideal scenario in deploying new processing software is to run the old and new systems in parallel “for some time to allow problems to emerge,” McPherson says. But that's often difficult for banks to do, he says. The downside of not doing it, however, is that “these things [glitches] can cost them a lot of customers.”