December 29, 1999


              Millennium Bug Bites UK Shoppers Early


              REUTERS INDEX | INTERNATIONAL | BUSINESS | TECHNOLOGY 


              Filed at 10:50 a.m. ET

              By Reuters

              LONDON (Reuters) - Thousands of small retailers were unable to process credit card
              transactions in the post Christmas rush Wednesday as millennium bug problems hit a
              payment system used by global banking giant HSBC Holdings. 

              Swipe card machines maker Racal Electronics said that some 20,000 of its terminals
              including 14,000 operated by HSBC refused to work when they hit a glitch ticking over
              into a four day data-checking period that included January 1, 2000. 

              ``On Boxing Day, we had the first alert that there might be a problem...Yesterday we
              were advised by Racal that a number of terminals were affected,'' said HSBC
              spokesman Richard Beck. 

              ``It is a software time and date-related issue, which will be resolved and we're entirely
              confident that terminals will revert to full functionality at the start of the New Year,''
              said Nicholas West, spokesman for Racal. 

              ``A customer helpline detailing the solution is in place and the company is pro-actively
              making every effort to support its merchant customers,'' he added. 

              Racal said the problem could affect around two percent of all UK credit card using
              outlets, and 10 percent of the 200,000 machines it has in service. It said most of the
              customers affected were small retailers and there were few or no machines of the type
              involved operating outside the UK. 

              According to HSBC, the data check that caused the problem is a diary function for the
              retailer's use, and not needed by the bank. It said the check could be overridden, and
              the payment processing completed, by pressing the ``Clear'' key twice after the
              transaction. 

              HSBC spent $54 million in 1999 completing checks on its systems ahead of the
              millennium date change. On December 13 it issued a statement saying it did not expect
              ``operations or services to customers to be disrupted as a result of its systems not
              being Year 2000 compliant.'' 

              Robin Guenier of the independent advisory group Taskforce 2000 said he was not
              surprised to see difficulties emerging, but expressed concern that a major bank was
              caught up in Y2K troubles at such a late stage. 

              ``We have had constant assurances from the Financial Services Authority and the
              government that the banks are fully ready,'' he said. ``Quite clearly this one is not. 

              ``We have to be a little bit concerned about that, and one wonders what else is going to
              turn up.'' 

              The glitch caught more than 10,000 UK merchants by surprise in the busy
              post-Christmas period. 

              Merchants trying to swipe charge cards through Racal machines for credit
              authorizations found cards being improperly rejected, forcing them to go through
              time-consuming telephone authorizations instead. 

              Industry sources said commercial customers of other major UK clearing banks may
              have also been affected. A spokesman for Barclays said the problem had hit only a
              ``tiny number of retailers'' from its customer base.