Friday, July 22, 2005

CardSystems threatened with extinction due to Visa and AMEX termination

The CEO of CardSystems testfied before the US House Financial Services Subcommittee that his company is likely to shut down because Visa and Amex is ending their relationship with the company that was faulted with allowing a breach of personal information of 40M people.

Credit Data Firm Might Close - Yahoo! News:

"As a result of coming forward, we are being driven out of business," John M. Perry, chief executive of CardSystems Solutions Inc., told a House Financial Services Committee subcommittee considering data-protection legislation. He said that if his firm is forced to shut down, other financial companies will think twice about disclosing such attacks. ...

Perry called the decisions by Visa and American Express draconian and said that unless Visa reconsiders, CardSystems would close and put 115 people out of work. CardSystems handles only a small percentage of American Express transactions, while Visa accounts for a large part of its business.

Perry said closing his company could disrupt the ability of merchants to complete transactions, since it might take time for them to arrange for alternate payment processors. For that reason, Visa said it is not cutting off the company until Oct. 31.

While Perry said his company is doing everything it can to ensure that such a breach never occurs again, Visa said it could not overlook that CardSystems knowingly violated contractual requirements for how long credit card data were supposed to be stored and how they were secured...."

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