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Troubled CardSystems to be sold




Troubled CardSystems to be sold
Troubled CardSystems to be sold



http://www.networkworld.com/news/2005/092305-cardsystem.html 

By Robert McMillan
IDG News Service
09/23/05

A Mountain View, Calif., electronic payment company plans to buy
CardSystems, the transaction processing company which had data on 40
million customers compromised when hackers broke into its servers
recently. On Friday, CyberSource announced that it has signed a letter
of intent to acquire the CardSystems assets, a transaction that could
close by year's end.

The deal gives CyberSource an opportunity to expand into new areas
beyond the e-commerce transaction services that have built the 175
person company, said Bruce Frymire, a company spokesman. "It brings a
lot to CyberSource," he said. "It's a processing platform, which we
have not had at this point. It also gives us retail point of sale
processing."

CardSystems is used by 120,000 merchants to process more than $18
billion worth of transactions annually, Frymire said.

Online thieves were able to break into CardSystems' Tuscon, Ariz.,
operations center and steal credit card information from the company's
servers. The intrusion, which was disclosed in June, was detected
after fraudulent charges began appearing on some of the stolen
accounts.

CardSystems' CEO John Perry has since admitted that the stolen records
were improperly kept, and his company's business has taken a hit
following the disclosure. Both American Express and Visa U.S.A. have
said that they intend to sever their relationship with CardSystems by
the end of October.

Whether or not the planned CyberSource acquisition will affect these
defections may be a factor in the deal. "Certainly that would be a
matter of serious interest to us," Frymire said of the impending
departures.

CardSystems and CyberSource are working to ensure that merchants
experience no disruption of service, he added.

CyberSource says the transaction is subject to further due diligence
and may also be subject to regulatory approval. Frymire would not say
how much CyberSource expected to pay for the privately held Atlanta
company.



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