CyberSource Corp. plans to buy the assets of CardSystems Solutions Inc., the embattled payment processor that lost its right to process Visa U.S.A. and American Express Co. transactions after a security breach exposed the confidential account information of 40 million cardholders.
CyberSource, a gateway and acquirer, today said it signed a non-binding letter of intent to buy CardSystems’ assets. Terms of the deal were not disclosed. The transaction is expected to close in the fourth quarter, pending regulatory approval.
When completed, the sale will transform CyberSource from a gateway provider into a transaction processor for both online and offline merchants. “This is a new capability for us,” a spokesman says.
Under the agreement, CyberSource will acquire CardSystems’ payment processing platform, giving it direct access to the major credit card associations’ networks and banks. It also will acquire a network of independent sales organizations, opening a new sales channel for CyberSource, the company says. ISOs recruit merchants for payment processors.
In addition, CyberSource would acquire the contracts to process card transactions for CardSystems’ more than 120,000 online and offline merchants, which represent over $18 billion in annual processing volume.
CyberSource currently has 10,000 large online merchants, including Nike.com, The Home Depot Inc., and Burlington Coat Factory. “This is a significant expansion of our movement into the small business arena that we started one and a half years ago,” the spokesman says.
By integrating CardSystems’ processing platform with CyberSource’s payment services, CyberSource will be able to offer retail point-of-sale processing for multi-channel merchants and automated chargeback management, the company says.
CyberSource said it is working with Visa, AmEx, MasterCard International and Discover Financial Services to ensure that there will be no interruption in card processing for CardSystems’ merchants.
Both Visa and AmEx set an Oct. 31 deadline for terminating their relationships with CardSystems, which would mean CardSystems’ merchants wouldn’t be able to accept those cards.
MasterCard and Discover had not decided whether to terminate CardSystems’ rights to process their transactions.
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