Tyro Payments Ltd (ASX: TYR) has released a final announcement in relation to the terminal connectivity issue plaguing the company since 7 January 2020.
It’s been a wild start to the year for the Tyro share price, experiencing big swings in response to the terminal issue, a subsequent short report and then management’s response.
TYR share price chart
Status update
After the market closed on Wednesday, the company announced that the number of terminals connected to Tyro’s network has returned to pre-incident levels.
There are a limited number of the 32,000 Tyro merchants who remain impacted by the outage, including:
- 486 merchants who have zero working terminals, despite efforts to recover the impacted terminals for repair.
- 1,490 merchants who have at least one working terminal, but still have at least one non-functioning terminal. There is an active engagement program in place seeking to coordinate the collection of these terminals.
- 643 merchants with obsolete terminals that are no longer manufactured, and thus need to be replaced. Tyro is replacing these terminals at a capitalised cost of approximately $500,000, on terms no less favorable to the impacted merchants.
As to the impact on transaction values, January date-on-date transaction values are up 8% on the previous year from $1.541 billion to $1.662 billion.
This is a slower growth rate compared to the recent monthly transaction volume, with Tyro recording a 13% increase in November and a 19% increase in December.
Where to from here?
In my view, Tyro’s reputation as a reliable, technology-focused payment provider has been damaged. No outage is positive, however, the time taken to identify and correct the issue will only exacerbate the impact on current and future customers.
Moreover, in an earlier announcement to the market, the company disclosed it has received correspondence from a law firm advising of a potential class action against Tyro. The fallout will likely play out over the coming months, but Tyro may need to compensate customers for lost sales, which would come at an expense to the company and thus shareholders.
Promisingly, the transaction values for the month of January have grown despite at one point having over 30% of merchants with a non-functioning terminal.
The company will update the market with its half-year results in February. It will be interesting to note customer churn from the event, and if the current growth rate sustains or returns to December levels.
For further reading, check out my colleague Patrick’s write up on why Tyro should be added to your watchlist.
