Tyro targeted by short seller as outage continues
Beleaguered payments technology company Tyro is being targeted by short seller Viceroy Research which claims Tyro’s technology problems laid bare in its recent eleven-day long outage are worse than reported.
Tyro, the largest provider of Eftpos terminals outside the big four banks, first told investors on January 7 it was experiencing a “terminal connectively” outage that was affecting its customers.
Tyro initially estimated the outage had affected less than 15 per cent of its terminals and 5 per cent of merchants. It later updated that figure to 30 per cent on Wednesday in a fresh statement to the Australian Securities Exchange. The outage is still ongoing on Friday morning.
In a research report published on Friday, Viceroy claimed approximately 50 per cent of Tyros terminals across the country are offline and “bricked” requiring a recall and capital intensive terminal replacement.
“Tyro has singled itself out as the most unreliable and technologically inferior fintech in Australia,” Viceroy’s report states. “It has no disaster recovery plan and has left businesses, including medical facilities, without any means to collect payment from customers.”
Tyro listed on the ASX in December 2019 and was valued at $1.4 billion on debut. It reported a $19 million loss in February last year.
The financial impact on Tyro of the outages has already hit with the fintech reporting total transaction value of $214 million for the period from January 8 to January 12, a 14 per cent drop on the $249 million reported for the same period last year.
Viceroy’s analysis suggests the true impact is much greater as Tyro had grown by almost 20 per cent over the year so the transaction value drop is closer to 30 per cent.
Tyro claimed it is collecting and repairing its terminals via its partner Amtek and expected to have the majority of its customers back to normal operations by Friday however Viceroy said collection efforts had been limited as Amtek has only 225 technicians and contractors and locations in only three states to collect up to 2,000 terminals a day.
Tyro customers contacted by The Age and The Sydney Morning Herald were still waiting for their terminals to be returned by Tyro on Friday, eleven days after the outage first occurred.
Binod Bahadur, owner of Rasoi restaurant in Tarneit, Victoria, said he had lost thousands of dollars in sales since the outage as most customers wanted to pay by card.
“Many customers refused takeaway orders and cancelled bookings once we advised them that we are only taking cash,” he said.
Mr Bahadur Tyro’s terminal has been collected but he has not received a replacement yet leaving him unable to process payments.
The problems are widespread and across industries with Business For Doctors chief executive April Armstrong, reporting hundreds and perhaps thousands of medical clinics have been unable to process patient payments. Viceroy also alleges in its report that Westfield shopping centres are unable to read gift cards. Westfield has been contacted for comment by The Age and The Sydney Morning Herald.
Tyro’s customers have left thousands of comments on the fintech’s Facebook page complaining about the outage.
Viceroy said many Tyro customers had already switched to another provider, such as Square, as Tyro’s terminal solutions are provided without lock in contracts so the cost of switching is minimal or non-existent.
Prior to the outage Tyro was already experiencing around 12 per cent churn rate which Viceroy said was “extremely high” for a payment entity.
The short seller said changing customer habits as a result of Covid-19 were also impacting Tyro with contactless ordering systems which have rolled out in hospitality venues across Australia bypassing the need for its terminals.
Cara is the small business editor for The Age and The Sydney Morning Herald based in Melbourne
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