Subj: Y2K Bug Triggers Credit Card Snafu
Date: 12/29/99 8:42:01 PM Pacific Standard Time


Times

GenevaY2K Bug
Triggers Credit Card Snafu

Times

GenevaThe Associated Press

Dec 29 1999 9:20PM ET
Times

LONDON (AP) - 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.

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.

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

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

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's London 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 bug, 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.

Britain had been hit by another, though less serious problem. In
August, thousands of London residents lost power for days after the
city's main utility distributed faulty smart cards designed to be
year-2000 ready. The microchip-embedded cards caused customers'
electric meters to shut down until they could be manually repaired.

The so-called Y2K bug stems from programming that expressed years in
two digits. Left uncorrected, the bug 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.''