VISA- not making Idle threats re:Y2K compliance
Visa gets tough on year 2000 bugs
Visa International, Inc. has threatened to impose
fines of more than $160,000 per month on any of its
20,000 member banks, credit-card processors and
merchants that fail to make their credit-card
processing systems year 2000-compliant.
Visa is using the threat of financial penalties to force
a few slow-moving business partners to speed up
their year 2000 conversion work. Other businesses
may try the same tactic, analysts said. "Penalize or
remove the franchise -- that will become a common
practice," said George Kivel, a technology analyst at
The Tower Group, a financial services consultancy in
Newton, Mass.
San Mateo, Calif.-based Visa is launching the penalty
system to ensure that the systems in its consortium
can process cards with expiration dates that read "00"
or higher in the year field. Otherwise, systems will
conclude that valid cards have expired.
"We decided to take a stand," said Sam Galdes, vice
president of service quality at Visa. Visa members
have made "reasonably good" progress, Galdes said.
"The problem is, reasonable isn't good enough for
us," he added.
Galdes declined to quantify the size of the fines that
Visa plans to impose, nor would he specify a deadline
for year 2000 compliance. However, a recent story in
The Times of London said after April, banks that
have problems processing Visa cards will be charged
up to about $169,100 per month, depending on
volume, until they correct the bug.
Galdes said Visa so far has experienced a "very, very
small" number of year 2000-related credit-card
processing failures. He also expressed confidence that
all the businesses that process Visa transactions will
fix their problems in time.
Meanwhile, a spokesman at MasterCard
International, Inc. in Purchase, N.Y., declined to
comment.
by Thomas Hoffman and Robert L. Scheier
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