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Summary and Comments

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1997-08-26 00:00:00


Credit Cards Compliant?



The flurry of interest in this was caused by an announcement by Visa in mid-August that SOMEDAY SOON, its cards will be 2000-compliant. MasterCard, too. Maybe in October.

When you have in your hand a letter on letterhead stationery announcing a company's complete Year 2000-compliance, you have something that MAY be significant. Until then, just ignore such announcements.

What I want to see is a letter on Visa letterhead announcing that all of the banks' computers that Visa cards interact with are Year-2000 compliant.

Barring this -- an impossibility -- I want to see a letter from Visa explaining how the y2k status of a bank's computer in no way affects the ability of Visa to guarantee payment by each bank. This means that Visa will continue to guarantee payment to the seller of each transaction by any customer who buys something with a Visa card, even if that customer's bank is noncompliant.

When you have such a letter in your possession, let me know.

Then I'll ask this: How will this help a seller if his bank is noncompliant?

* * * * * * *

This was my "take" on the story when I posted it on August 20. For some reason, readers have continued forward me this report. It has been the number-one item sent to me since I started this site. I do not understand this. The Visa story is a non-event if there ever was one. Maybe it's because people (including reporters) desperately want to hear good news about y2k. So far, there has been no good news that has withstood detailed inquiry.

On August 22, I received this letter from Cory Hamasaki, a well-known y2k programmer.

* * * * * * *

For example, "the credit card companies have solved their Y2K problem." Well, no, they haven't. They believe that the in store point of sale systems and their central clearing systems can handle credit cards that expire after December 31, 1999. They will be running live tests later this year. They haven't stated that their systems will process transactions made after the Year 2000. They don't promise that their systems will accept batches of transactions which include pre and post year 2000 charges. They don't know if card re-issue runs made after the Year 2000 will renew cards. They don't know if interest charges and fees will be calculated correctly during the 1999 to 2000 transition. They don't know if their computer systems will work at all. All this must be tested and retested and they haven't said that they've done this. This is the work that Peter deJager is harping about. As far as anyone can tell, it's not being done. The well publicized credit card expiration date problem is a trivial problem compared to the others.

* * * * * * *

The London Sunday Times (Aug. 24) ran a story on the possibility of chaos looming for retailers as a result of Visa's announcement. It said:

"SHOPPERS may face chaos this Christmas after a decision last week by Visa and Mastercard to issue thousands of customers with credit cards bearing the year 2000 as an expiry date, writes Chris Dodd. . . .

"Year 2000 experts fear British shops and retailers are not ready to deal with the new cards when they become valid on October 1, and predict customers will suffer months of misery until the correct software is installed across the country.

"Andy Courtneidge is head of card services for OSI, a management support group that advises Visa on credit-card issues, specifically the year 2000 projects.

"I don't understand the reasons behind the decision. Retailers aren't ready for the cards, and it is the worst time of year to be issuing them. The run-up to Christmas is going to be ridiculous. It is going to cause chaos," he says. . . .

A spokeswoman for Visa says: "We are 98% ready for the October 1 deadline, and we are sure people will not suffer any difficulties. We don't foresee any problems."

"American Express, which has worked with both companies to resolve the problem, remains sceptical, and has decided not to issue cards with a 2000 expiry date. . . .

"Rob Wirszycz, director-general of the Computing Services and Software Association (CSSA), expects the move to catch out retailers and cause many computer crashes.

"It will cause a hell of a lot of problems for shops," he says. "People will not be able to use the cards in a lot of places and it will cause chaos. People just aren't ready for this move." . . .

"Both Visa and Mastercard are confident their decision will not backfire, and that any problems will be minimal.

"Mastercard says: "We have carried out extensive testing over the past year and honestly think we have got the problem licked."


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