Customers and shareholders could sue the fintech over the ‘bricked’ terminals disaster that’s now turning into an existential crisis.
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A law firm is investigating the potential of suing Tyro Payments Ltd (ASX: TYR) on behalf of its customers and shareholders.
The fintech is currently dealing with a technical outage that’s seen many of its small business customers unable to process credit and debit card payments.
The disruption is now into its 9th day, with some desperate clients defecting to alternative payment terminal suppliers like Commonwealth Bank of Australia (ASX: CBA) or Square Inc (NYSE: SQ).
Legal firm Bannister Law on Wednesday announced it has started an investigation into potential claims that businesses can make for any losses suffered.
“Some businesses have been left with the woefully inadequate situation of accepting cash payments only, losing essential revenue. In this difficult time, they require every cent to survive and pay their overheads,” the firm stated.
Bannister Law urged any impacted Tyro clients to contact it with information.
Small business owners left with “bricked” Tyro terminals have expressed their anger on social media.
“We are going bankrupt yet all you can say [is] sorry for the inconvenience! I would like to know how you plan your business?” one customer said.
“We need compensation for all the losses!”
Tyro shareholders could also join legal action
Not only are its customers suffering, the existential crisis has sent the Tyro share price tumbling almost 13% since the saga started on Tuesday 5 January.
Bannister Law is thus also calling for any aggrieved shareholders to contact it to explore potential claims.
Late Wednesday morning, Tyro revealed that the fault lay within the software of some of its terminals supplied by a company named Worldline.
“This issue caused a subset of those terminals to lose connectivity with our network, meaning they could neither transact nor be updated remotely,” Tyro told its customers.
About 30% of Tyro customers have been left with dead terminals, which equates to 10,000 businesses.
With the fault unable to be fixed remotely, the fintech has started the labour-intensive process of physically collecting all the dud devices then returning them after repair.
“We are collecting approximately 2,000 terminals a day for repair and return via the fastest possible delivery method,” the company stated.
“Based on the quantity of terminals being collected daily, and the time to return fixed terminals, we expect to have the majority of impacted customers back to normal operations by the end of this week, with the remainder operational over the course of the following week.”
Not good times for the once high-flying fintech
The Motley Fool reported earlier this week some Tyro clients were having to deal with theft due to the payment terminal outage.
“My wife has just had her first refusal to pay from a customer ($190 cut/colour service) with [the] customer saying that it is the salon’s fault that she is unable to make payment,” said one person on Facebook.
“Fortunately we have CCTV footage, a name, a phone number and a possible place of work for this person. Recovery of this amount will further add to the time wasted by your service not working.”
Tyro was granted a banking licence back as a private company back in 2015, and had since built up to be the largest provider of payment terminals outside the major four banks. The company listed on the ASX in 2019.
Tyro also landed in hot water last month after it was found to have sent 150,000 illegal spam messages during the last 2 years.
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Tony Yoo owns shares of Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.