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American Express to cut ties with payment processor

Ties to be cut with the small payment processor at the center of perhaps the credit card industry's biggest data breach.

American Express said Tuesday that it would soon end its relationship with CardSystems Solutions, the small payment processor at the center of perhaps the credit card industry's biggest data breach.

MasterCard International, meanwhile, said that it would continue to allow its cardholders' data to be handled by CardSystems provided security was upgraded. "As of today, we are not aware of any deficiencies in its systems that are incapable of being remediated," MasterCard said in a statement.

The announcements follow Visa USA's decision to wind down its relationship with CardSystems immediately, a move that could place the processor's future in jeopardy. They come as executives from all three major credit card companies, along with John M. Perry, CardSystems' chief executive, are expected to testify Thursday before Congress.


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Visa said Monday that it was ending its relationship with CardSystems even after the card processor's recent remediation efforts because it could not "overlook the significant harm" caused by the compromise of data. CardSystems, it said, could not correct the failure to protect its Visa cardholder data.

American Express appears to have reached a similar conclusion, but its move was largely symbolic given that it had said that CardSystems processed only a tiny fraction of its cardholder transactions. Judy Tenzer, an American Express spokeswoman, said that the company would terminate its relationship with CardSystems at the end of October and help its merchants switch to another processor.

MasterCard, however, said that CardSystems' problems could be fixed and it was working with the card processor to develop a detailed compliance plan so as to not cause disruption for its merchant customers. If CardSystems cannot demonstrate that it is in compliance by the end of August, the statement said, its "ability to provide services to MasterCard members will be at risk."

Jennifer Born, a Discover Financial spokeswoman, said that Discover was reviewing its relationship with CardSystems and would "make a decision once that process is completed."

CardSystems executives were traveling, and a spokeswoman said they could not be reached.

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