Payments solutions provider Tyro Payments Ltd (ASX: TYR) has disclosed a remediation update following the January terminal outage.
The share announcement has had a negative effect on the share price, down 2.08% to $3.76.
Tyro remediation gathers pace
Customers impacted by the terminal connectivity outage in January – which at its peak affected 30% of the total merchant base, have been encouraged to register for Tyro’s ‘make good’ remuneration program. A total of 3,656 merchants have registered to date with claims of financial loss with 888 already settled.
Registered merchants have been offered two remediation options:
- Accelerated Path Assessment – a simple remediation solution via a merchant service fee rebate over a designated period
- Case Managed Path Assessment– a more tailored remediation solution under which an impacted merchant provides specified claim information regarding losses
Additionally, terminal rental charges were waived for impacted merchants in January.
Tyro has received 973 responses opting for the accelerated path option and 76 responses from merchants wishing to pursue the case managed option.
My take
Management has got on the front foot to minimise “costs, delays and uncertainty inherent in legal proceedings”. The final point is the key.
In January, Tyro received correspondence from a law firm that it is investigating a potential class action against the company. By liaising with merchants directly and settling claims individually mitigates against the risk of a far greater financial impact on Tyro.
In 18 years of operation, Tyro has not incurred an outage of this magnitude. Its customer-centric approach is on show, demonstrated by the two remediation options. Most have and will opt for the accelerated option, while more severely impacted merchants (who would likely be pursuing a class action) will be able to receive tailored compensation.
Since the incident, churn has not materially changed indicating merchants are satisfied with Tyro’s response.
The company has approximately 37,000 merchants, meaning up to 11,000 merchants may register for remuneration. However, I suspect the majority of those affected have already registered.
Tyro did not disclose the financial impact.
The share price has rebounded to be above January levels, despite falling over 30% on news of the terminal connectivity issue. I’m hoping for further colour on the financial impact in the full-year results before deciding whether to invest.
For the time being, Tyro will remain on my watchlist.
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