Technical Issues with Payment System See Tyro Fall Sharply

By Glenn Dyer | More Articles by Glenn Dyer

Shares in fintech group, Tyro Payment lost more ground on Tuesday on a growing realisation that its payment system has been hurt badly by a major technical problem.

The shares fell 8% to $2.89, their lowest in 10 months. In fact that’s the lowest the shares have been since the sell-off in March of last year in the depths of the first COVID lockdown.

Investors seem to have been slow to realise the potential damage of the problem for Tyro.

They are down more than 13% since January 7, (and a peak of $3.35) the day when the outage happened and over 8% of that fall happened on Tuesday.

But Tyro should have issued a statement on Tuesday in the wake of the AFR report on news of the replacement of the terminals.

This time around investors have been selling the payments company’s shares in the wake of a surprise update last week that it had encountered problems with its payments system.

“Tyro is experiencing a terminal connectivity issue with respect to a limited number of its EFTPOS terminals. The issue has been present since 7:00pm Tuesday 5 January 2021 and every effort is being made to achieve a resolution. To this end, Tyro is working closely with our terminal supplier, Worldline, who are assisting in the resolution effort,” Tyro said in the statement on January 7.

“Tyro is also doing all that it is able to mitigate the impact upon merchants with the issue appearing to impact ~15% of our terminal fleet as active in January 2021. At this stage the issue has caused a ~5% reduction in expected transaction values over the period in question, however the total impact will only be able to be quantified once the issue is finally resolved.

The selling is being driven by growing fears that the company will have top spend millions of dollars to fix the problem and will lose payments fee revenues while the outage continues. There are fears that this bad publicity could also have a negative impact on new customer signups.

A report in Tuesday’s Australian Financial Review yesterday triggered the latest selling (the share shave fallen from a most recent peak of $3.27 on January 5, two days before the outage hit)

The paper said as many as 10,000 Tyro payment machines have been “locked” since the outage started by the software problem.

The company has around 32,000 small to medium businesses – many of whom are retailers- and around 64,000 machines installed.

Tyro, the paper said, will now have to replace the 10,000 machines compromised by the software problem as they cannot be remotely fixed. That will cost the company millions of dollars, not to mention the claims from angry clients who have been unable to process payments and have been forced to resort to cash at a time when COVID fears have forced most payments online or to card based touch and pay systems.

Tyro was the largest Australian float of 2019 and the biggest selling point was that it was the largest issue of EFTPOS machines outside the big banks.

The company is chaired by former Telstra CEO David Thodey and was valued at $1.4 billion when floated in late 2019. It peaked at a valuation of more than $1.7 billion on December 6. It was valued at $1.59 billion yesterday.

Bendigo and Adelaide Bank late last year announced a partnership with Tyro that would see Tyro provide the regional bank’s customers with co-branded terminals that would grow its base by 26,000 machines.

The machines are scheduled to be rolled out this year. None of Bendigo Bank’s terminals have been affected by the outage.


Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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