Retailers demand Telstra pay for massive payments outage

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Retailers demand Telstra pay for massive payments outage

Costs could reach $100 million.

Key leaders in Australia’s retail industry say Telstra should be on the hook for compensation for lost sales resulting from Thursday’s national outage that crippled payment systems for around half the trading day after all major banks, merchant EFTPOS terminals and ATMs were knocked offline.

As the mop-up continues after the major incident, merchants are demanding more transparent mechanisms for who ultimately cops the bill for digital downtime as businesses unable to trade bleed cash.

The outage, which knocked-out an industry transaction hub known as COIN as well as multiple proprietary network links, hit all major banks, Woolworths, Caltex and Australia Post.

Executive director of the Australian Retailer’s Association Russell Zimmerman said the incident was a “huge concern” for his members because most electronic payment methods were hit.

“This sort of disruption is not something retailers enjoy,” Zimmerman told iTnews. “Retailers lost money”.

But how much money, and how to count it, is not yet clear. Zimmerman said that he knew of one restaurant that had to let a bill for $100 meal go unpaid.

Some petrol stations were also caught short after customers filled-up only to discover they couldn’t pay.

And the option of cash became an issue because ATMs were also hit.

A more difficult calculation is that of quantifying the value of sales lost if a customer walked in, discovered they couldn’t pay and walked out, Zimmerman said.

A further issue that retailers face is that while banks and payments providers sell transaction services, Telstra is essentially a third-party provider making the money more difficult to chase.

Telstra told iTnews it was in discussions with affected parties and customers and would look at issues on a case by case basis.

A common form of compensation for outages that breach service level agreements is to add additional services as a make-good for customers rather than paying refunds.

National Retailers Association chief executive Dominique Lamb said it was “still a little difficult to ascertain the exact cost to retail sales at this early stage” but didn’t hesitate to bowl up a nine-digit bill.

“The amount in lost sales could be as high as $100 million for the day, however, hopefully much of it will be recouped by customers simply doing shopping today and tomorrow rather than yesterday,” Lamb said.

“Given both the time of day and the businesses affected, the Telstra outage certainly caused a large degree of inconvenience for both shoppers and retailers yesterday. Thursday being a popular day for late-night shopping would have also seen many consumers cancel shopping plans last night."

Some businesses like taxis are hit especially hard when payments go down in the commuter peak hour.

At A2B, which owns Cabcharge, a spokesman confirmed it was affected by the outage but said it was possible to mitigate some of the disruption by rerouting transactions.

The company is still trying to quantify the actual amount of damage.

Asked if the company would seek compensation from Telstra, the spokesman said the damage first needed to be assessed before considering what action would be taken.

A2B has previously called out Telstra’s outages before as having a financial impact.

In February the company told investors Telstra’s infamous two-day machine-to-machine (M2M) connectivity outage that hit eftpos and other payment systems had cost it $5 million in taxi fares unable to be processed”.

The Reserve Bank of Australia has also raised concerns around the resilience of payment systems amid underinvestment by banks coupled with outsourcing and reliance on infrastructure providers like Telstra.

The cause of the outage has not yet been determined, however Telstra said there was heavy network traffic at the time.

Multiple sources have suggested a cable cut in the North Sydney area was part of the glitch, but this has not been confirmed. 

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