HSBC Holdings may face legal action from thousands of angry UK retailers after a Year 2000 computer problem on Wednesday temporarily disabled credit card terminals distributed by the UK-based bank.
More than 10,000 of the bank's terminals refused to process customers' credit card transactions, thanks to a four-day calendar feature that requires the terminals to recognise the year 2000, a bank spokeswoman confirmed.
"This is a minor problem that will be cleared up after January 1," the spokeswoman said. In the meantime, affected retailers have been advised to disable the calendar feature so that the terminals, which provide customers with a carbon copy of their transaction record, will function properly.
That wasn't enough to placate the thousands of mostly small and medium-sized retailers affected by the glitch. Customers took their business elsewhere when the credit card terminals failed, costing the affected retailers an estimated 3 million British pounds in lost sales, according to Stephen Alambritis, a spokesman for the UK's Federation of Small Businesses.
"We'll discuss this with HSBC to see what their thinking is. If they are not forthcoming in terms of compensation, we will seek counsel and see if a class action (lawsuit) is appropriate," Alambritis said.
"This came as a shock," he added. "For small businesses, the sales period is a very important time."
The glitch is something of an embarrassment for HSBC, which like other financial institutions had issued strong assurances that its computers would not be affected by the Year 2000 date change. HSBC, formerly known as the Midland, is one of the UK's largest banks.
The bank is quick to note that it only distributed the credit card terminals; they were actually manufactured by Britain's Racal Electronics. About 20,000 of Racal's terminals were affected altogether, many of which were distributed by other UK clearing banks, she said.
"HSBC did undertake testing of the normal terminal software, but this (calendar function) is a special feature," the spokeswoman said.
In a brief statement, Racal said about 2 per cent of retail outlets that accept credit cards may have been affected by the problem.
"We regret any inconvenience caused to customers and stress that card payments are in no way affected by this short term problem - transactions remain absolutely secure and statements are unaffected," the company said in the statement.
"Extensive diagnostic tests have been carried out and we are entirely confident that the terminals will revert to full functionality at the start of the New Year when the terminals are re-calibrated."