Retail chain Co-op is offering compensation to customers after it took money from their bank and credit card accounts six months late because of Epos transactions that were "lost".
This week Danny Murray, the head of financial services at the Co-operative Wholesale Society (Co-op) told Computer Weekly that an upgrade to software in 650 of its stores caused a small number of outlets to lose track of all payments by bank and credit cards on certain days last August.
Only after the Co-op spent months analysing every card payment made on these days, at each of the Epos check-outs at the affected stores, were the payments put through on customer bank and credit card accounts.
But some customers were dismayed last week when shopping bills they thought they had paid in the store last August were deducted from their accounts only at the start of this month. Switch Card Services in London confirmed that retailers can, by law, claim authorised payments from card-holders at any time, whether the delay is an hour, six months or several years.
The problem shows how an apparently small software glitch can, in a high-volume transaction processing environment, snowball and cause months of difficulties.
Many retailers process card payments at the check-out desk, then pass data to back-office in-store systems that collate the information so it can be collected by centralised equipment.
In the Co-op's case this collection is outsourced to HSBC. On certain days last year HSBC's computers polled the Co-op's back-office systems but, in some stores, there were no transactions waiting to be processed. Problems with a software upgrade had stopped the payment details being sent from the Epos check-out terminals to the back-office systems.
The Co-op's service level agreements with HSBC do not require an alert to be raised when centralised systems poll local stores and find no transactions waiting to be processed. So the problem was not identified immediately. Co-op management only launched an investigation when regular reports from HSBC showed that, in certain stores, no payments had been processed for four days in August last year.
"We can only apologise," said Danny Murray. "If anyone has suffered bank charges because of the unexpected debit of their accounts we will consider compensation."
One of the main lessons the Co-op has learnt is the need for daily reports on the outcome of polling, to identify quickly any payments that have failed to reach the back-office systems.
Murray added that the supermarket might, like some other major retailers, bring the processing of debit and credit card transactions in-house. He stressed that HSBC was not in any way to blame.