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Power surge puts card payments into stand-in mode
MONETT, Mo. (8/17/11)--A power surge Monday morning at a Houston, Texas, data center for card transactions processor Jack Henry & Associates damaged an uninterruptable power system, causing credit and debit card purchases to end up in "stand-in" mode. As a result, potential purchases by members and other consumers were turned down at the point of purchase. At least one credit union, Heartland CU in Madison, Wis., was fielding calls Monday from members who said their purchases were turned down (Wisconsin State Journal Aug. 15). The problem, which was resolved the same day, occurred at 8 a.m. CT Monday "when a local utility company's transformer blew and interrupted power to our facility," Debbie Wood, general manager, marking and industry research at Jack Henry, told News Now. "We immediately converted to our generator system without interruption in service to our clients." However, when the utility company restored power by about 1:30 p.m. CT, it "damaged equipment at our facility, causing a power outage." Power was restored by 7 p.m. and connectivity to other networks was completed at about 9 p.m. The outage was restricted to only those financial institutions who process through the Houston Data Center. While they could have been located anywhere in the U.S., they were most likely in the Midwest or Southwest region, Wood said. It is not known how extensive the outage affected credit union members. "Since the stand-in transaction approvals are actually set at the financial institution level, we do not have insight into the number of end-users that might have been affected," she added. She explained what is mean by stand-in mode: "As a consumer performs a transaction such as buying gasoline with a debit card, the normal authorization process is to check to be certain that, in the case of a debit card, there is enough money in the consumer's account to cover the cost of the purchase, or in the case of a credit card, that the person has enough left on their credit limit to cover the cost of the purchase." However, some times this cannot be accomplished in a real-time environment, she said. An issue with communication equipment connecting the point-of-sale device to the network to facilitate the approval, or maintenance being formed on the network, or as in the case of Monday, connectivity to the host is lost, are examples. "In these cases, financial institutions have already pre-determined an amount, called stand-in, that they will allow the consumer to charge during this time that the system is offline. So, if for some reason a consumer goes to buy $50 worth of gasoline, and the stand-in amount set by the credit union is $100, the transaction will be approved," Wood said. However, if the stand in amount set by the credit union is $25 in the same instance, "the transaction would be declined." She said Jack Henry & Associates advises credit unions concerned about this kind of situation to "take a moment to review the pre-determined stand-in amounts that are currently set for card transactions performed in an offline mode to determine if they are appropriate."
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