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Thursday, February 18, 2010

Heartland settling up with Visa

Heartland Payment Systems Inc. took a major step toward closing the book on its 2008 data breach by reaching an agreement with the vast majority of Visa Inc.'s issuing banks affected by the event.

According to a joint media statement issued by the two companies, 97 percent of the affected banks accepted a $60 million settlement, well above the 80 percent figure Visa and Heartland had agreed on as a minimum for settling. Under the terms of the settlement, the issuers involved must relinquish all other claims against the processing giant.

"My understanding is Heartland didn't want to enter into an agreement unless there was a critical mass of issuers willing to enter into the settlement," said payment attorney Paul Rianda. "It wouldn't make sense to pay this amount of money if only 30 or 40 percent are participating; that leaves them with huge exposure."

Regarding the issuers who did not join the agreement, it is likely they simply lacked the initiative to involve themselves, Rianda said.

"I guess there's that liability that exists that they can potentially come after Heartland, but you look at the numbers – the three percent [not involved with the settlement] – and if it's that low, it's probably the people who just couldn't be bothered to respond versus people just chomping at the bit to go after Heartland," Rianda said.

Likely to settle with other card brands

Heartland settled with American Express Co. in December 2009 for $3.6 million but has yet to reach an agreement with either Discover Financial Services or MasterCard Worldwide. Rianda said it was likely Heartland would reach similar settlements with those two brands.

Ken Musante, Vice President and Chief Sales Officer for payment processing firm Moneris Solutions, said the settlement is a good development for parties on both sides.

"I think it's good for heartland and good for the issuers," he said. "It allows Heartland to put this behind them and go forward, and the issuers don’t have to do all the tracking and reporting they would if this agreement wasn't in place."

end of article

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