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Visa to compensate cardholders after system failure

Paloma Kubiak
Written By:
Paloma Kubiak

Visa has implemented a compensation scheme for cardholders following its system failure earlier this month which saw 2.4 million transactions in the UK fail to process.

From 2:35pm on Friday 1 June to 00:45am on Saturday 2 June Visa’s UK processing systems experienced issues which meant cardholders were unable to complete transactions using Visa debit and credit cards.

Over the course of the 10-hour period, 2.4 million transactions in the UK failed to process out of 5.2 million impacted in Europe.

Visa said 91% of the transactions of UK cardholders processed normally, with around 9% failing on the first attempt. But with many retrying transactions, Visa said the number of affected cards fell to approximately 1.1 million (6.7%).

In a letter to the Treasury Select Committee, which had demanded answers following the IT fiasco, Visa apologised to all affected for failing to meet expectations.

CEO of Visa Europe, Charlotte Hogg, wrote: “We take seriously our important role in supporting financial stability in the UK. A disruption to our processing that impacts consumers at any time is unacceptable, let alone during a busy Friday afternoon.”

In the letter, Hogg explained that two data centres operate in the UK, with each able to independently handle transactions for Visa Europe. If one were to fail, the other would be the backup. But, the switch from the primary to the secondary centre failed which prevented the backup switch from activating.

As such, it took far longer to isolate and deactivate the system which resulted in a backlog of transactions.

Hogg said there should not be any cases of customers being charged for transactions that weren’t completed. She added: “We are working closely with our issuing banks in the UK to address the impacts of the incident, including appropriate compensation of cardholders.

“Given that cardholders expect to work with their card-issuing bank on disputes or concerns about use of their cards, Visa has communicated with issuing banks in the UK that it will stand behind redress of those customers by reimbursing issuers for payments they make to cardholders as a result of the incident.

“The banks are best placed to review these specific circumstances on a case-by-case basis.”

‘Less tolerant of IT failures’

Chair of the Treasury Committee, Nicky Morgan MP, said: “The Treasury Committee is satisfied with Visa’s answers regarding its system failure earlier this month, which lasted just over 10 hours and saw 2.4 million transactions in the UK fail to process. It appears that the problems have been fully resolved.

“The news that debit card payments have overtaken cash use for the first time shows that the reliability of IT systems is becoming ever-more important. The detriment caused to consumers by IT failures is greater than ever, so the Committee will become less tolerant of them.”

An independent review by EY will examine the incident in further detail.