Sunday , September 19, 2021

Questions Loom Over What Caused the TSYS Outage And the Fallout From It

Nearly four days after mega-processor Total System Services’ platform went offline, independent sales organizations that use the TSYS platform remain in the dark as to how and why the outage occurred.

The outage, which has been described as a nationwide event for TSYS, occurred Saturday night and prevented TSYS, as well as ISOs that use its platform, from processing payments for merchant customers. 

On Tuesday, Shift4 Payments Inc., which uses the TSYS platform, said via email that the outage affected “hundreds of thousands of businesses nationwide…Since TSYS makes up a large portion of the U.S. payments infrastructure, this outage impacted many other payment processors and financial institutions across the country and unfortunately this included a limited number of our venue partners.” Shift4 says it will “fully compensat(e) all of our impacted customers for any losses suffered during TSYS’s backend failure.”

The outage, Shift4 said in a message to merchants sent in the immediate aftermath of the incident and obtained by Digital Transactions News, impacted some of its customers, as well as customers of many other payments companies across the country. On Monday, Shift4 informed its merchant customers that efforts were under way to determine specific funds yet to be deposited into their bank accounts.

In 2019, Global Payments Inc. merged with TSYS in an all-stock deal that valued at $21.5 billion. Global Payments, which did not respond to phone and email inquiries about the outage, owns 52% of the merged entity.

While the circumstances that led to the outage remain unknown, some observers fear that more such hiccups could happen. “Most processors built their connections to the card networks in the 1980s. Now the technology is so old it has created a technology deficit and needs to be upgraded. When it’s not, [unexpected outages] are what happens,” says Jordan Thaeler, chief executive for, and co-founder of, Aben, a marketing-software provider to merchants. 

One factor keeping mega-processors from updating their back-end platforms is that many have grown in recent years through mergers and acquisitions, which has created a hodge-podge of technological infrastructure that is expensive to modernize, but necessary for day-to-day operations.

Even with the dust still swirling around the TSYS outage, questions are being raised about the impact to the mega-processor’s business. One potential impact could be the loss of volume from large, high-volume merchants. 

“Most merchants have relationships with multiple processors and can shift transactions when a problem like an outage occurs,” says Rick Oglesby, president of AZ Payments Group, a payments consultancy. “The question is whether that volume will shift back”

For merchants that don’t have a backup-processor relationship, Oglesby says they will probably be looking for additional processor relationships after this incident, adding that unexpected outages are one of the worst things that can happen to their business.

The outage is the latest incident to plague the TSYS platform. In 2020, the company suffered a ransomware attack. In that attack, criminals focused their efforts on Cayan, a payments company TSYS bought early in 2018 for just over $1 billion. 

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