Last Updated: Monday 17 April 2000 TOP STORIES

Debit machine 'meltdown' hits stores

Daniel Sieberg Vancouver Sun The "meltdown" of a debit-card keypad in a Delta Safeway store has prompted the Bank of Montreal to replace 11,000 of the keypads across Canada, a Toronto spokesman for the bank said Sunday.

About 50 retailers -- including Safeway and Revy -- lease or rent the machines from the bank nationwide.

"It had what I call a meltdown," said Joe Barbera. "It overheated and fell off its stand and started smoking."

The incident happened a little more than a week ago and prompted bank officials to send the faulty terminal to an independent research laboratory for testing.

The results revealed that a design flaw in the battery compartment could cause the batteries to dislodge and become overheated.

Barbera said this weekend the bank advised retailers to stop using the machines and began the process of replacing them with new ones.

"Granted, there's a level of inconvenience," said Barbera. "But I think there are still sufficient alternatives for people to use, like paying by cash, credit card or cheque."

Barbera said the bank is able to program and ship about 1,500 replacement units every day to the different vendors in time to cope with the busy Easter long weekend.

Although some merchants will have to wait until Thursday, a spokeswoman for Safeway said as of Sunday night all their stores have at least three new debit-card machines in place to deal with purchases.

There were more than 3,000 of the old units in the 212 Safeway stores across the country.

Safeway's Toby Oswald said the swap was expedited because the grocery retailer had previously planned to update the palm-sized terminals, which are four to eight years old, and therefore already had many of them in stock.

Oswald said that while the rest of the PIN pads are programmed, customers can also use back-up debit vouchers, which allow Safeway to later deduct the purchase amount from a person's bank account.

The company had stocked up on the vouchers in anticipation of a Y2K glitch in the debit-card system.

Barbera said the Bank of Montreal will likely be covering the entire cost of replacing the debit-card keypads because Atalla, the company that manufactured and sold them, is out of business.

In total, the Bank of Montreal owns about 65,000 debit-card units, said Barbera, with 11,000 produced by Atalla.

However, no other Canadian banks appear to be using the Atalla brand, he added.

Paul Griffin, regional director for the Canadian Banking Association, stressed the problem was a mechanical issue and not a security concern.

http://www.vancouversun.com/newsite/news/000417/3945616.html

-- Martin Thompson (mthom1927@aol.com), April 17, 2000