In Wake of CyberSource Deal, Visa Postpones CardSystems Ban

Visa U.S.A. reportedly has postponed for three months its plan to ban from its network transactions from troubled merchant processor CardSystems Solutions Inc. in order to facilitate the sale of CardSystems' assets to CyberSource Corp. In the wake of a massive security breach at Atlanta-based CardSystems in May that compromised 40 million card accounts, Visa originally planned to ban transactions from the processor beginning Oct. 31. But now, according to reports published today, Visa has issued a statement saying it has postponed the ban until Jan. 31 to aid the sale to CyberSource, a processor and electronic security services provider. CardSystems serves more than 120,000 merchants. Mountain View, Calif.-based CyberSource announced last week it planned to buy CardSystems' assets (Digital Transactions News, Sept. 23) and was working with the payment networks. “We are very encouraged by the (Visa) development, as you might imagine,” a CyberSource spokesperson tells Digital Transaction News. “It shows flexibility on their part.” Visa spokespersons did not return calls from Digital Transactions News by mid-afternoon. American Express Co. also has announced plans to ban CardSystems' transactions from its network. An AmEx spokesperson could not be reached for comment on today's development. According to a Reuters report, Visa's delay has conditions attached, including compliance with Visa's security standards by both CardSystems and CyberSource. Although some observers have said privately that an unknown number of merchants have already been switched from CardSystems' platform in anticipation of the Visa cut-off, the CyberSource spokesperson, while acknowledging that he does not get daily updates on the size of the portfolio, says he is not aware of major defections. The number of merchants on the CardSystems platform, 120,000, was a conservative number when the tentative deal was announced last Friday, the spokesperson maintains. Terms of the deal were not announced, but CyberSource hopes to complete the transaction by year's end.