Language Selection

English French German Italian Portuguese Spanish

Visa to Bar Transactions by Processor

Filed under
Security

Visa USA said yesterday that it would stop allowing the payment processor CardSystems Solutions to handle its transactions, months after the processor left the records of millions of cardholders at risk for fraud.

"CardSystems has not corrected, and cannot at this point correct, the failure to provide proper data security for those accounts," said Tim Murphy, Visa's senior vice president for operations in a memorandum sent to several banks. "Visa USA has decided that CardSystems should not continue to participate as an agent in the Visa system."

Cardholders and merchants should not be affected by the change.

Visa said its decision to remove CardSystems came after a review and an independent investigation found that the payment processor had improperly stored cardholder data and did not have the proper controls in place.

It is unclear if MasterCard and American Express will take similar action, but with Visa accounting for more than half of all card transactions, the move raises questions about the future of CardSystems.

"I've never heard of them booting off a processor," said Avivah Litan, a security analyst at Gartner Inc., a technology research group. "The worst thing that I've heard is a processor that had to cough up $1 million."

The move came at least two months after Visa first learned that data had been compromised and just days before its executives, along with those of other major card companies, have been called to testify in Washington about their security practices. The chief executive of CardSystems, John M. Perry, is also expected to testify on Thursday.

In a statement released yesterday, CardSystems said Visa's decision was unexpected and upsetting. "We are disappointed and very surprised that Visa has decided to take this action today, not only because of the impact that it will have on our employees, but the disruption that it will cause to our 110,000 merchant customers," the processor said in a statement. "We hope that Visa will reconsider."

Visa has given at least 11 banks, which hired CardSystems to handle the merchant transactions, until the end of October to change processors, the memo said. Until then, CardSystems will be allowed to process Visa transactions as long as it has corrected any problems and allows a Visa-affiliated monitor on site to oversee its operations in Tucson. CardSystems is also banned from handling Visa transactions from its international affiliates or any new merchants, processors or member banks in the United States.

Visa had been weighing the decision for a few weeks but as recently as mid-June said that it was working with CardSystems to correct the problem. CardSystems hired an outside security assessor this month to review its policies and practices, and it promised to make any necessary upgrades by the end of August. CardSystems, in its statement yesterday, said the company's executives had been "in almost daily contact" with Visa since the problems were discovered in May.

Visa, however, said that despite "some remediation efforts" since the incident was reported, the actions by CardSystems were not enough.

"Visa cannot overlook the significant harm the data compromise and CardSystems' failure to maintain the required security protections has had on member financial institutions and merchants as well as the significant concerns it raised for cardholders," the company said in a statement.

At this point, it is unclear what the other branded card companies will do. MasterCard has previously said that it was giving CardSystems a "limited amount of time to demonstrate compliance with MasterCard security requirements" but never laid out a specific timetable.

Sharon Gamsin, a MasterCard spokeswoman, did not return calls seeking comment. Judy Tenzer, an American Express spokeswoman, said the company did not comment about its relationships with vendors. Leslie Sutton, a Discover Financial spokeswoman, could not offer an immediate response.
Visa's decision is the latest development since the disclosure in mid-June that the CardSystems computer network had been compromised, putting the cardholder names, account numbers and security codes of as many as 40 million credit and debit cardholders at risk for fraud. The information of about 22 million Visa cardholders was exposed; MasterCard reported the data of 14 million of its cardholders was potentially at risk; and the rest largely belonged to customers of American Express and Discover.

At the time, Mr. Perry of CardSystems acknowledged that the company had been improperly storing data, violating Visa and MasterCard security rules. He said data thieves directly obtained information related to some 200,000 cardholder accounts. The F.B.I and a group of federal banking regulators are now investigating.
In its statement, Visa offered its most scathing indictment of those security violations to date. The chief executive of CardSystem had "stated that the company knowingly retained unmasked magnetic stripe cardholder data, purportedly for 'research purposes,' " Visa said. "Visa's security requirements were adopted precisely for the purpose of protecting cardholder information and guarding against the type of data compromise recently experienced by CardSystems."

In the letter Visa sent to the banks, Mr. Murphy suggested that the data breach occurred as early as August 2004.

By ERIC DASH
The New York Times.

More in Tux Machines

Microsoft Linuxwashing and Research Openwashing

today's howtos

Why Everyone should know vim

Vim is an improved version of Vi, a known text editor available by default in UNIX distributions. Another alternative for modal editors is Emacs but they’re so different that I kind of feel they serve different purposes. Both are great, regardless. I don’t feel vim is necessarily a geeky kind of taste or not. Vim introduced modal editing to me and that has changed my life, really. If you have ever tried vim, you may have noticed you have to press “I” or “A” (lower case) to start writing (note: I’m aware there are more ways to start editing but the purpose is not to cover Vim’s functionalities.). The fun part starts once you realize you can associate Insert and Append commands to something. And then editing text is like thinking of what you want the computer to show on the computer instead of struggling where you at before writing. The same goes for other commands which are easily converted to mnemonics and this is what helped getting comfortable with Vim. Note that Emacs does not have this kind of keybindings but they do have a Vim-like mode - Evil (Extensive Vi Layer). More often than not, I just need to think of what I want to accomplish and type the first letters. Like Replace, Visual, Delete, and so on. It is a modal editor after all, meaning it has modes for everything. This is also what increases my productivity when writing files. I just think of my intentions and Vim does the things for me. Read more

Graphics: Intel and Mesa 18.1 RC1 Released

  • Intel 2018Q1 Graphics Stack Recipe
    Last week Intel's Open-Source Technology Center released their latest quarterly "graphics stack recipe" for the Linux desktop. The Intel Graphics Stack Recipe is the company's recommended configuration for an optimal and supported open-source graphics driver experience for their Intel HD/UHD/Iris Graphics found on Intel processors.
  • Mesa 18.1-RC1 Released With The Latest Open-Source 3D Driver Features
    Seemingly flying under our radar is that Mesa 18.1 has already been branched and the first release candidate issued. While the Mesa website hasn't yet been updated for the 18.1 details, Dylan Baker appears to be the release manager for the 18.1 series -- the second quarter of 2018 release stream.