Thursday, August 18, 2022

Evertec Inquiry Poses Important Questions

By on January 28, 2016

‘Twas three days after Reyes and all through the ATH network, not a creature was stirring, not even a mouse. In fact, it was the late afternoon of Jan. 9—from around 5 p.m. to 7 p.m.—when Puerto Rico’s debit system came to a screeching halt. As a result, consumers were unable to use their debit cards to withdraw cash from automated-teller machines (ATMs) and businesses couldn’t process debit transactions at point-of-sale (POS) terminals.

For those two hours, the network’s moniker ATH, short for “A Toda Hora” (At All Hours), rang hollow.

During the outage, some 200,000 transactions were affected. José Alameda, one of the economists interviewed by Caribbean Business, made a rough calculation of the possible monetary value of the losses stemming from the service interruption. His reasoning was based on 77,770 POS on the island, according to the Treasury Department, and with each POS averaging $3,162.35 in sales per day (amounting to $316.23 in average sales per hour), the estimated value of the losses for those 200,000 uncompleted transactions over two hours came up to $126.4 million.

More than some “end of times” event, the ATH episode raises important questions that need to be answered. Why did it happen? Where are the redundancies to back the system up? Were people’s identities compromised? What is to prevent this from happening again?

During a recent press conference, the network’s owner and operator, Evertec, shuffled out its top brass to answer pointed questions from the local media. The rabbit pulled from the Top Hat responses—“an anomalous failure” in one of the company’s main servers that in turn caused the massive outage in the ATH network—doesn’t satisfy this newspaper.

If Evertec isn’t a monopoly, where are the other providers when the system goes down?

To his credit, Popular Democratic Party (PDP) Sen. Luis Daniel Rivera Filomeno is conducting a Senate probe into the Evertec brouhaha. Among the issues being investigated are the outage event, the rates that Evertec charges clients and whether the company represents a monopoly.

Rivera Filomeno told Caribbean Business that “Evertec controls such a huge part of the market that it’s almost impossible for store owners to go to anyone else for their electronic transaction needs, even though there are six more similar companies registered here in Puerto Rico.”

Puerto Rico’s consumers deserve answers to important questions. Rivera Filomeno is bound and determined “to have a clear picture, and if we deem that it is necessary to draft a bill that would take care of the problem, then that is what we will do.”

Another important question to ask during the inquiry is why hasn’t the central government put Evertec’s long tentacles to good use in automating sales & use tax (IVU by its Spanish acronym) collections at the POS terminals? The technology exists to reroute IVU taxes directly to Treasury’s coffers. With Treasury Secretary Juan Zaragoza fighting mightily to snuff out tax evasion with recent raids on delinquent businesses, this technological upgrade is desperately needed.

A Puerto Rico business community that is struggling with a huge tax burden can ill afford to have 200,000 transactions thrown in the trash bin. Nor should it have to shoulder a tax load that could be lightened by retooling technology at the points of sale.





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