Visa extends until Jan. 31 its plans to cut ties with processor CardSystems
Visa U.S.A. is delaying termination of its relationship with CardSystems Solutions Inc. until Jan. 31 to ease the way for CyberSource Corp.’s planned acquisition of the troubled card processor’s assets.
Visa had planned to end CardSystems’ right to process Visa transactions on Oct. 31 because the processor had failed to comply with industry standards for database protection, leading to a security breach earlier this year that exposed the confidential account information of 40 million cardholders.
The processor has since adopted security measures that bring it into compliance with the standards.
CardSystems processes transactions for more than 120,000 online and offline merchants, representing $18 billion in annual volume. CyberSource last week announced it had signed a letter of intent to buy the processor’s assets.
In an announcement yesterday, Visa said it is extending the deadline for the “sole purpose” of helping CyberSource complete the acquisition, which is expected by year-end.
“We welcome the development,” says a CyberSource spokesman. He noted that the company wants to ensure that merchants don’t experience any disruptions in transaction processing when CyberSource takes over. “We like to think that this most recent Visa action makes that much more likely,” he says.
Visa says the extension is contingent upon the processor and CyberSource meeting the association’s data security requirements.
American Express Co., which also set an Oct. 31 deadline for terminating its relationship with CardSystems, has made no decision on whether to delay that action pending the CyberSource acquisition, a spokeswoman says.
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