Evertec Inquiry Poses Important Questions

‘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.

 

 

 

 




EVERTEC to Announce 4Q, Full Year Results on Feb. 17

SAN JUAN — Puerto Rico-based transaction processing company EVERTEC Inc. will host a conference call and webcast on Feb.17 at 5 p.m. ET to review fourth quarter and full year 2015 financial results. Participating on the call will be Mac Schuessler, president and CEO, and Peter Smith, executive vice president and CFO.

The conference call can be accessed live over the phone by dialing (888) 317-6016 or for international callers by dialing (412) 317-6016. A replay will be available one hour after the end of the conference call and can be accessed by dialing (877) 344-7529 or (412) 317-0088 for international callers; the pin number is 10079333. The replay will be available through Feb. 24,. The call will be webcast live from the company’s website, www.evertecinc.com.

EVERTEC manages a system of electronic payment networks that process more than 2.1 billion transactions annually. It owns and operates the ATH network, a personal identification number debit network. The company operates in 19 Latin American countries and serves financial institutions, merchants, corporations and government agencies.

By Caribbean Business




Senate Approves Probe Into EVERTEC after Network Outage

SAN JUAN – The Puerto Rico Senate will investigate the processing of electronic payment transactions carried out by EVERTEC, a company based in San Juan, after it passed a resolution to such an effect Thursday.

Popular Democratic Party Sen. Luis Daniel Rivera Filomeno presented Senate Resolution 1321 after the debit card system operated by EVERTEC broke down Jan.9, causing several problems at points of sale and automated-teller machines across the island.

The investigation not only aims to probe into the safety measures involved in the transmission of financial data, it also seeks to know more about the rates EVERTEC charges clients for its service.




Sen. Rivera Filomeno Calls for Probe on Payment Network Outage

Sen. Luis Daniel Rivera Filomeno, president of the Senate Consumer Affairs Committee, has filed a resolution to investigate Saturday’s collapse of the automatic-teller machine (ATM) and points of sale network managed by Evertec, which prevented costumers from carrying out ATM or debit card transactions for various hours at numerous establishments.

“Our purpose is to investigate what happened and what is begin done to prevent this from happening again. In [Puerto Rico], transactions should not come to a halt that easily. There are innumerable cases posted in the social networks of problems created by this situation [the outage], and we want to investigate it properly. That is why we filed Senate Resolution 1321,” Rivera Filomeno said.

He explained that the purpose is “to know, specifically, the information related to the processing and protection of clients’ data, the rates businesses are charged and the processing of payments with credit cards.”

Rivera Filomeno added that customers in the mainland U.S. who use cards issued by local banks had problems carrying out transactions as well, and that local business people, including the president of the United Retailers Association, have expressed their concern about the situation.

Resolution 1321 will follow its due regulatory process in the Senate, and a public hearing will soon be convened so the committee can gather data and render a full report, with findings and recommendations, to the Senate.




Evertec’s Red ATH Payments System Back Online After 2-hour Outage

SAN JUAN — Island merchants were slowly getting access back online to Evertec’s Red ATH electronic payments network around 7 p.m. after suffering a massive service interruption around 5 p.m.

Evertec is Puerto Rico’s largest electronic payments processor, practically serving all financial institutions and merchants on the island.

The two-hour disruption left merchants without being able to process electronic payments from debit or credit cards, as well as customers without access to automated teller machines, or ATMs, to withdraw cash to complete their transactions. Some online transactions were affected as well, with local cards being declined when attempting to rent a movie on Apple’s iTunes video service, for example.

Many merchants and customers resorted to complete their sales transactions using cash and/or checks.

The origin of the system’s interruption remains unknown. However, a heavier number of transactions than usual were reported as consumers ran to convenience stores to buy Powerball tickets for today’s drawing. The jackpot is of a record $900 million.

“At Evertec, we are confronting a service interruption, which is affecting ATMs and Point of Sale (POS) terminals at businesses. We are working hard to solve the problem as soon as possible,” Alan Cohen, Evertec executive vice president of marketing & communications said in a prepared statement.

The service interruption was detected between 4:30 p.m. and 5 p.m., affecting the customers of all the financial institutions on the island, Cohen added.

Some merchants were reporting that the system was back online at around 7 p.m., but Cohen reiterated Evertec technicians were still working making sure the system remained stable and consistent.

The system, Cohen added, needed to be restarted, requiring it to be turned off and back on, just like a computer when it crashes, he explained.

By José L. Carmona

 




Puerto Rico Stock Index lost 22.36% in 2015

SAN JUAN – The Puerto Rico Stock Index (PRSI) lost 504.05 points, or 22.36% of its value in 2015, according to the latest data released by the Government Development Bank for Puerto Rico (GDB).

The PRSI stood at 2,253.70 on Jan. 09, 2015. It ended at 1,749.65 at the close of trading on Dec. 31, 2015.

The PRSI is a capitalization-weighted (or market value weighted) index created by UBS and the GDB. It is composed of five companies based or with their main place of business in Puerto Rico.

The companies included in the index are traded on national stock markets (i.e., NYSE, AMEX) and in the over-the-counter market (i.e., NASDAQ).

The PRSI components are: OFG Bancorp, Popular Inc., First BanCorp, Triple-S Management Corp. and Evertec Inc. During 2015, the PRSI lost one of its components, Doral Financial Corp., as its banking subsidiary Doral Bank was shut down by the Puerto Rico Financial Institutions Commissioner’s Office, with the Federal Deposit Insurance Corp. as its receiver.

During the last week of 2015, the PRSI lost 44.18, or 2.46%, to close at 1,749.65.

Topping the list of nongainers was OFG Bancorp, which lost 54 cents, or 6.87%, to close at $7.32. It was followed by First BanCorp, which erased 22 cents, or 6.34%, to close at $3.25. Shares of Popular fell 52 cents, or 1.80%, to close at $28.34. Triple-S Management Corp. edged down 33 cents, or 1.36%, to close at $23.91. Shares of Evertec Inc. skidded 20 cents, or 1.18%, to close at $16.74.

By José L. Carmona