Rivals Look to Gain New Merchants in Fallout from CardSystems Case

The fallout from the largest data-security breach yet in the electronic payments business continues, with rival processors looking to pick up new merchants now that both Visa U.S.A. and American Express Co. have said they are terminating CardSystems Solutions Inc. as a processor on their networks. CardSystems' list of clients “is gold at the moment,” says Paul Martaus, a payments consultant in Mountain Home, Ark. “There's going to be a lot of reprogramming going on.” CyberSource Corp., an e-commerce processor in Mountain View, Calif., may be among those eyeing CardSystems' merchants. During a conference call yesterday to discuss second-quarter financials, William S. McKiernan, CyberSource's chief executive, told analysts “there may be an opportunity for us there” given that CardSystems will no longer be allowed to process Visa and AmEx payments. Asked by Digital Transactions News to elaborate, a CyberSource spokesman would say only that “to the degree we had a strategy [to approach CardSystems clients] we wouldn't be talking about it.” Atlanta-based CardSystems, which processes card payments for 100,000 small and medium-sized retailers, including both card-present and online merchants, was notified early this week by Visa that it could not process Visa transactions effective Oct. 31 (Digital Transactions News, July 19). AmEx followed suit a day later, setting the same deadline. The company's chief executive, John M. Perry, is expected to testify today, along with executives from major card companies, at a hearing held by the House Financial Services Subcomittee on Oversight and Investigations, which is looking into a recent string of security breaches involving card data. The largest of these occurred at CardSystems, where a hacker was able to gain access to data related to 40 million accounts and apparently stole data linked to 200,000 accounts.