High street lender TSB has been forced to delay a switch to Mastercard for its card payments as it focuses on getting its computer systems back to health following the IT collapse it suffered earlier this year.
TSB had planned to leave Visa Europe for its card operations by the end of this year, but has now been forced to delay the move until 2019 at least.
The challenger bank suffered severe issues in April when its efforts to switch to a new computer system caused a crash, locking thousands of customers out of their current accounts for weeks.
While most of the issues have now been fixed, the bank was last week forced to delay the delivery of new debit cards expiring at the end of August, although these have now arrived. The delay on new debit cards was unrelated to the move to Mastercard.
The switch to a new core banking system came as the bank tried to cut IT costs by transferring to a system built by its Spanish owner, Sabadell. It had previously relied on costly support from former owner Lloyds Banking Group for its IT systems.
Visa Europe currently dominates provision of cards to Britain’s biggest banks, with Lloyds, HSBC, Barclays and Royal Bank of Scotland all using the firm. However, Santander is moving to Mastercard next year, joining challenger lender CYBG and digital-only banks Monzo and Starling.
The delay of TSB’s move to Mastercard, first reported by the Financial Times, will likely add another cost to the bill for the bank, which was forced to take a £176m hit in extra costs during the first half of 2018.
Other costs to come include those of consultants at computing giant IBM and accountant Deloitte, as well as an investigation being run by law firm Slaughter and May.
A TSB spokesperson declined to comment on commercial terms, but said: “We’re pleased to be working with Mastercard. The partnership presents lots of opportunities for TSB and our customers in 2019 and beyond.”
A Mastercard spokesperson said: “TSB is a valued partner to Mastercard and we are working closely with them to roll out Mastercard Debit cards from 2019. By working together we will ensure TSB account holders have the best possible payment experience.”