July 20, 2005

Visa, Amex cut ties with card processor after data breach

In an unprecedented move both Visa and AmEx decided to no longer allow CardSystems to process their branded cards. CardSystems is headed by a former Visa executive so I'm suprised they had no pull with Visa to stay in business.

    Visa USA and American Express are cutting ties with the payment-processing company that left 40 million credit and debit card accounts vulnerable to hackers in one of the biggest breaches of consumer data security.

    CardSystems Solutions "has not corrected, and cannot at this point correct, the failure to provide proper data security for Visa accounts," said Rosetta Jones, a vice president at Foster City, Calif.-based Visa, in a statement.

    She said banks that issue Visa cards would have until Oct. 31 to replace CardSystems with one of the hundreds of other payment-processing companies in the U.S.


MasterCard has taken the economic and potentially smarter path by reprimanding them by allowing them to continue processing their branded cards. MasterCard knows that CardSystems will improve their security and continue to make them money. Visa on the other hand wants to send a message to the community that you either comply or face the music!

[via USA Today]

Update: Some more links...
American Express to cut ties with payment processor (Eric Dash of The New York Times)
Visa cuts CardSystems over security breach (John Leyden of The Register)
Attorney General Mike Cox demands CardSystems Solutions, Inc. notify affected Michigan cardholders and help them take steps to avoid becoming victims of identity theft.

Update: This came only a day after the AP reports that ChoicePoint is trying to regain consumer (and card association) trust.

    the Internal Revenue Service last month awarded ChoicePoint a new $20 million contract to help the agency locate assets owned by delinquent taxpayers.

Posted by volubis at July 20, 2005 12:05 AM | TrackBack