Payments solution fintech Tyro has hit back at claims it under-estimated the effects of its service outage, which has left small businesses unable to accept payments on its systems for more than two weeks.
The response addresses what Tyro calls “false claims and assertions” made in a damning report from short selling group Viceroy Research last Friday, which caused Tyro’s share price to plummet.
Tyro called a halt to its shares trading on the ASX, to prevent trades occurring in “an uninformed market”, it said in its response.
It claims the report was designed to “generate uncertainty”, and ultimately lead to profit for its authors, and accuses Viceroy of a “deliberate attempt to obfuscate disclosures made by Tyro in relation to the terminal connectivity issue”.
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“Ten key false claims”
Specifically, Tyro’s response outlined “ten key false claims” it says were made in Viceroy’s report.
First, it disputed the report’s claim that 50% of Tyro’s terminals were ever offline, saying only 15% have been affected.
Tyro also maintains the issue was not caused by a ‘software patch’, as suggested in the report.
Rather, the response says the outage was caused by terminals’ certificates being incorrectly interpreted as expired, it said.
The Viceroy report suggested repairing or replacing affected terminals would cost about $12 million. Again, Tyro says this is incorrect, arguing instead that terminals simply require a software update.
“There is no capital-intensive terminal repair or replacement required,” it said.
Tyro’s response addresses claims that Westfield gift cards have been affected by this outage. The Viceroy report claimed these cards are loaded using Tyro terminals, and were now unusable.
Today, Tyro disputed any relationship between Westfield gift cards and the Tyro outage.
“If a gift card was not working on a non-Tyro terminal that has nothing to do with Tyro,” it said.
Further, Tyro disputed Viceroy’s claims that it had “no disaster recovery plan”, that it does not know how many of its terminals are functional, and that customers have had little to no contact from the embattled provider.
The fintech pointed to emails it sent to merchants, as well as status updates on its website, and said it has been offering round-the-clock phone support.
Viceroy’s report also picked holes in Tyro’s efforts in collecting faulty terminals, suggesting that its courier partner Amtrak was not large enough to manage the national operation, and that businesses — particularly those outside of metropolitan areas — would be waiting more than the two-to-four days Tyro outlined for a replacement terminal.
Today, Tyro doubled down on its commitment to this turnaround time. In its status update, the fintech said it expects to have the whole incident resolved “by the end of the week”.
The fintech also hit back at Viceroy’s claim that its product offering is over a decade old, saying that 60% of its terminals are less than three years old, and 80% are less than five years old.
And finally, it took issue with Viceroy’s analysis of its cashflows.
The report suggested that Tyro “floats its operating cash flows through customer deposits”, effectively putting depositors at risk.
In its response, Tyro said as of the end of December it had cash and investments excluding depositor funds of some $137 million.
Deposits are generated to fund merchant loans, it said, rather than to support cashflow.
A rough start to the year
Viceroy’s report on Tyro caused the ASX-listed fintech’s share price to dip by about 80% on Friday.
Tyro’s response to the claims came about 20 minutes before the markets opened on Tuesday.
At the time of writing, things have improved slightly. Tyro’s share price has increased from $2.32 at the time of the halt to $2.63.
The report came amid an ongoing outage that left merchants, including small business owners, unable to take card payments.
Last week, it was revealed that up to 10,000 eftpos terminals were down, with some saying they have purchased Square terminals to tide them over.
The outage has now been going on for over two weeks.
Bannister Law has announced it is investigating claims against Tyro from a large number of affected businesses.
In its update today, Tyro said no proceedings have commenced.