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As Tyro Payments (ASX: TYR) scrambles to repair EFTPOS terminals 'bricked' by faulty software, short seller Viceroy Research has released a damning report suggesting the payments processor is downplaying the issue.
In particular, Viceroy alleges approximately 50 per cent of Tyro's terminals are impacted by the outage; in contrast Tyro claims only 30 per cent of customers have been hit by the issue.
Shares in TYR fell 11.79 per cent to $2.32 per cent in response to the report and the company has since gone into a trading halt.
Viceroy hopes to capitalise upon this "limited-risk short" as customers flee Tyro and partner with "vastly superior, non-archaic payments solutions providers".
"Tyro is the 5th largest merchant acquiring bank (by number of terminals) in Australia, behind the four major banks (NAB, CBA, WBC, ANZ)," says Viceroy.
"Since its IPO in late 2019, Tyro has singled itself out as the most unreliable and technologically inferior fintech in Australia.
"We believe Tyro presents significant downside."
According to Viceroy, Tyro's financials are "unappealing" and the fintech provides a product that can't hold a candle to its competitors' offerings.
"The reputational and financial fallout from this outage will likely be severe and long-lasting," says Viceroy.
"Investors should demand an independent investigation into the issues surrounding Tyro's "bricking" of merchant terminals, together with a review of internal controls."
According to Tyro the fintech will provide the ASX next week with an update about its recovery plan and a response to the Viceroy report.
"The matters as stated in Tyro's release on 13 January 2021 remain correct," says Tyro.
"Given the movement in Tyro's share price this morning following the release of a third party report which made false assertions contrary to the company's recent disclosures, Tyro has requested this trading halt."
The report is just the latest headache for Tyro.
Over the last week the company has been madly collecting up to 2,000 broken terminals per day from merchants affected by an outage which caused a subset of terminals to lose connectivity with Tyro's network, meaning they could neither transact nor be updated remotely.
The issue has even sparked discussion of a class action law suit to potentially be brought by Bannister Law, which is exploring options to support impacted customers and potentially TYR shareholders as well.
Prior to its trading halt, shares in TYR were down 11.79 per cent to $2.32 per share.
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