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Visa cuts CardSystems over security breach

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Visa USA has dumped a card processing firm blamed for a security breach affecting anything up to 40m credit card numbers from MasterCard, Visa and other card issuers. Payment processor CardSystems Solutions admitted it wasn't supposed to hold the compromised data, so it comes as no great surprise that Visa USA has stopped allowing it to process transactions on its behalf.

Security vulnerabilities at CardSystems left unencrypted credit card data - including customers names, card numbers and cvv (security) codes but not customer addresses - open to attack. Records "known to have been stolen" covered roughly 200,000 of the 40m potentially compromised credit card accounts. CardSystems only held the data in order to carry out unauthorised research into why particular transactions had registered as unauthorised or uncompleted. Visa dropped CardSystems after independent investigators said the processing firm has failed to introduce proper controls following the breach, which become public in June.

"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 SVP for operations in a memo leaked to The New York Times. "Visa USA has decided that CardSystems should not continue to participate as an agent in the Visa system."

Visa has given 11 banks until the end of October to switch payment processing firm. The New York Times reports it's unclear if MasterCard and American Express will take similar disciplinary action, which would threaten the future of the payment processing firm. CardSystems said it hopes to persuade Visa USA to reconsider its decision.

The security breach at CardSystems came to light after MasterCard and an unnamed bank, together with computer forensics firm Ubizen, traced unusually high levels of fraud identified in mid-April back to problems at CardSystems. CardSystems said it reported the security breach to the FBI in May 23, the day after security experts nailed the source of the security breach. MasterCard, which went public on the problem on 17 June, is the only card issuer thus far to trace specific instances of fraud back to CardSystems. However other card issuers may been hit and the scope of fraudulent activity caused by the breach remains unclear. ®

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