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Visa Grants CardSystems an Extension

Visa U.S.A. extended the deadline for cutting soon-to-be acquired third-party processor CardSystems Solutions Inc. from its network until Jan. 31, 2006. The three-month extension follows CyberSource Corp.'s September 2005 announcement of plans to purchase all of CardSystems' assets. Visa said the extension is "for the Sales Partners Gather Under Humboldt's Redwoods sole purpose of helping to facilitate CyberSource's planned acquisition."

"We are very encouraged by this development," CyberSource spokesman Bruce Frymire said. "It demonstrates flexibility by Visa and progress in the transaction with CardSystems."

After a widely publicized breach at CardSystems in May that resulted in up to 40 million compromised credit and debit card accounts, and the discovery that CardSystems was noncompliant with the card Associations' Payment Card Industry (PCI) Data Security Standard, Visa and American Express Co. (AmEx) said they would no longer authorize CardSystems to process transactions on their networks after Oct. 31, 2005.

This meant that CardSystems merchants and affiliated ISOs would have had to find a new processor; after CyberSource announced the acquisition plans, this interruption was seen as a potential hindrance to the acquisition. "Changing the minds [of Visa and AmEx] is very important to providing uninterrupted processing service," Frymire said. Visa's extension has a few strings attached. It is contingent upon both CardSystems and CyberSource being compliant with Visa's data security requirements. If the stipulations are not met or if the acquisition falls through, Visa said it "reserves the right to eliminate some or all of the extension period."

After working with independent security auditor AmbironTrustWave, CardSystems announced in August its compliance with PCI. Frymire has said that "everything is on track" for CyberSource to achieve full compliance; as of Sept. 12, 2005, its status is pending on Visa's List of Compliant Service Providers.

In terms of extending its deadline, AmEx said it's still evaluating its options. CyberSource hopes to complete the acquisition of CardSystems by the end of 2005.

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