Mountain View, California electronic payment company plans to buy CardSystems
Inc., the transaction processing company which had data on 40 million customers
compromised when hackers broke into its servers recently. On Friday, CyberSource
Corp. announced that it has signed a letter of intent to acquire the CardSystems
assets, a transaction that could close by years 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.
"Its 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 US$18 billion
worth of transactions annually, Frymire said.
Online thieves were able to break into CardSystems Tuscon, Arizona, operations
center and steal credit card information from the companys servers. The intrusion,
which was disclosed in June, was detected after fraudulent charges began appearing
on some of the stolen accounts.
CardSystems Chief Executive Officer John Perry has since admitted that the
stolen records were improperly kept, and his companys business has taken a
hit following the disclosure. Both American Express Co. and Visa U.S.A. Inc.
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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