Bank card blunders leave shoppers red-faced

By Noelene Barbeau

South African consumers were left red-faced and out of pocket last week when their bank card payments were declined by national retailers.

The problem meant consumers were embarrassed at the till when the money was taken off their accounts, but the cashiers were informed by their systems that the amount was declined by the bank.

The Payments Association of South Africa (Pasa) said this was the first time in 10 years that something of this magnitude had occurred.

Pasa CEO Walter Volker said almost all banks as well as all retailers with a debit and credit card swiping machine facility were affected by this system failure.

"Bankserv is an automated clearing house owned by the banks and provides interbank electronic transaction switching and settlement services to the South African banking sector," said Carel Goosen, the Shoprite Group deputy managing director.

Simply put this means that when consumers use their bank card to make a payment, authorisation for this payment is requested by the retailer to the consumer's bank account, via Bankserv, and is then paid into the retailer's account.

However, last week the payment was only reflected from the consumer's bank and not reflected on the retailer's side.

"In the meantime, many customers, while still at the checkout, received a mobile text message from their bank that the transaction had been completed, but the information on the cashier's terminal advised that the transaction had been declined," Goosen said.

This was apparently an intermittent malfunction in the system with retailers' and consumers' frustration being further fuelled by "uninformed bank staff repeatedly sending their shoppers back to stores to have their problems resolved".

Shoprite complained about the loss of turnover and the effect Bankserv's system failure had on the supermarket group's service levels. It also approached the Reserve Bank to force banks to resolve this problem.

Both Pick n Pay and Woolworths said the system failure affected a limited number of their transactions.

Brad Gillis, head of Bankserv's business division, said the last time such an incident happened was for two hours in December 2004.

Last week all banks were switched on to their disaster recovery site and the problem was apparently resolved the same day.

However, a senior retail source said the problem persisted into Sunday, and that they would assess the problems for this week later today.

Gillis said credit card transactions below the card's floor limit, of R1 000 for example, would have gone through as well as transactions from the same bank, for example from one Nedbank account to another Nedbank account.

Bankserv is expected to meet with the South African Retailers Payment Issues Forum in December and are at present working with regulators and banks to ensure such an incident does not happen again.

On whether consumers would be reimbursed for these transactions, Volker said many of the payments were reversed at the weekend.

"Corrections would be done systematically and have been logged. Clients didn't have to contact their banks. This was a nationwide problem and affected most of the banks. This is something that happens once in 10 years. It was very unusual and unfortunate," he said.

Volker said Pasa was informed within 15 minutes of the problem and the banks switched to a back-up site, which also experienced problems.

"One of the problems was that this was not a complete failure, but half a failure, meaning that there didn't seem to be a switch over to the back-up site. If there was a total failure then there would have been an automatic switch to the back up site."

noelene.barbeau@inl.co.za

• This article was originally published on page 1 of The Daily News on November 11, 2009