Hacked and rejected CardSystems may now go out of business
The head of a payment-processing firm that was infiltrated by computer hackers, exposing as many as 40 million credit card holders to possible fraud, told Congress on Thursday that his company is "facing imminent extinction" because of its disclosure of the breach and industry's reaction to it.
"As a result of coming forward, we are being driven out of business," John Perry, chief executive of CardSystems Solutions Inc., told a House Financial Services Committee subcommittee considering data-protection legislation. If his firm is forced to shut down, he said, other financial companies will think twice about disclosing such attacks.
Visa USA Inc. and American Express Co. recently announced, after investigating the breach at CardSystems' Tucson, Ariz., facility, that they would no longer allow the firm to process transactions made with their cards.
Atlanta-based CardSystems is one of several firms that serve as a little-known hub in the nation's commerce system, transferring payments between the banks of credit-card-using consumers and the banks of the merchants where purchases are made.
Perry called the decisions by Visa and American Express draconian, and said that unless Visa reconsiders, CardSystems would close and put 115 people out of work. CardSystems handles only a small percentage of American Express transactions, while Visa accounts for a large part of its business.
