Up to 20 retailers were affected by a failure of Barclaycard’s payment systems. But how did it happen and where does the responsibility lie?
Why are we talking about it now?
On Saturday October 2, retailers including Sainsbury’s, Argos and Waitrose were unable to accept card payments when a technical problem at Barclaycard stopped transactions from being processed. Although the problem was fixed after 20 minutes, retailers reported it took more than an hour for the situation to return to normal, leading to thousands of angry shoppers, some of whom took to Twitter to complain.
What caused the problem?
Barclaycard revealed that a background file that supported the authorisation system had reached capacity, due to a technical defect. As a result, transactions were timing out instead of going through. The problem affected as many as 20 retailers. Barclaycard, which has apologised for the problem, said steps have been taken to ensure the issue cannot reoccur.
Are such failures commonplace?
Grant Wyatt, divisional general manager of S1 Corporation, which specialises in card payment solutions, says: “Card payments are extremely complex these days and rely on many players in the chain and multiple IT systems and telecommunication lines.”
Such widespread failures as this month’s are, however, very rare - the most recent example of an outage on such a large scale was on New Year’s Eve 2006, when Visa’s payment system went down.
Are retailers entitled to compensation?
Card payment systems providers have their own contracts with customers, and therefore have individual agreements on terms of service and remedies for any breach.
It is understood that in the case of this month’s failure, some retailers are considering seeking compensation but Barclaycard would not comment on the issue.
Who is responsible?
Individual retailers are responsible for having a back-up plan in place. During the Barclaycard outage, Waitrose still managed to process 95% of transactions because it has an in-house back-up system in place. Some of the other retailers affected, however, were reportedly sending customers out to cashpoints so they could pay by cash.
Wyatt acknowledges that there is an increased risk to the retailer that the cardholder might not have sufficient funds or credit to cover the transaction, but says: “Retailers need to determine if their risk of losing a sale and damage to customer reputation is higher than that risk and may choose to set threshold purchase amounts to better minimise risk.”