August 18, 1997

Visa, MasterCard Lift Ba n On 2000 Cards Visa downplays significance of first suit on 2000 issue By Andy Patrizio and Bruce Caldwell isa International and MasterCard International are about to take the next major step in their efforts to solve their year 2000 date-field problem. The credit-card companies have notified their member banks that, beginning Oct. 1, they can issue cards that expire after 1999. The move lifts a restriction that these and other credit-card companies imposed last year when such cards caused transaction glitches. The move comes on the heels of the first lawsuit filed concerning year 2000 point-of-sale (POS) compliance. Produce Palace International of Warren, Mich., filed suit against Tec-America Corp., its POS supplier, for quality problems with the two-year-old system. The company listed the inability to accept credit cards expiring past the year 2000 as one of its grievances. Such problems began cropping up about 14 months ago, the suit says. The grocer worked around the system's limitations by changing expiration dates to 1999. Visa, in Foster City, Calif., downplays the suit, arguing that the year 2000 problem was minor in that instance. The company also believes its aggressive year 2000 moves could prevent such problems in the future. But Visa isn't alone in taking on the problem. American Express, MasterCard, and others are working together to get all links in the credit-card-authorization chain in order. "We're all in this together," says John McCarthy, VP for the year 2000 project at Visa. "Our transactions flow through each other's payment systems." While both Visa's and MasterCard's internal authorization systems have been year 2000 compliant since 1994, the many steps between the point of sale and card authorization had to be dealt with. Most of the work had to be done on the in-store systems, says Gretchen McCoy, senior VP of quality management at Visa. Some old or nonstandard systems use unusual routing techniques, and all of these steps, as well as the POS systems, had to be checked for proper date handling. Visa says that by year's end, 100% of POS, ATM, and any other systems that handle Visa cards will be able to handle a post-1999 date, according to Scott Harrison, director of quality compliance at Visa. MasterCard is a little more cautious. "I would say 99.9% is very likely by the end of the year," says David Africk, senior VP of business systems at MasterCard, in Purchase, N.Y. But some think such claims are too bold. "Most retailers roll over technology on a five- to seven-year schedule," says Don Gilbert, senior VP of IS at the National Retail Federation, a trade association in Washington. "Many big retailers just don't have it in their budg ets to roll over their entire point-of-sale systems. They're going to take a substantial hit, and thousands of small shops haven't got a prayer." Credit-card executives disagree. "We've been working with [POS] vendors since 1992," says McCoy. "We've had word out to fix terminals and electronic cash registers. So terminals out there today are definitely year 2000 compliant." American Express is not yet issuing cards with expiration dates later than 1999, says a spokeswoman, because "not all merchants are year 2000 compliant yet." Issuers of The Discover card, now part of Morgan Stanley, Dean Witter Discover & Co., expect to be able to issue cards with 2000 expiration dates later this year. Visa and MasterCard got ahead of the pack by mandating that every member bank be ready for year 2000 by April 1. This summer the companies performed 150,000 field tests. If a noncompliant system was found, the merchant was given 30 days to fix it or face fines. It seems to have worked. Back to News in Review Send Us Your Feedback Top of the Page

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