US biometric authentication vendor Pay By Touch has signed an agreement to acquire substantially all of the assets of CardSystems Solutions - the Atlanta-based payments processor which was hit by a massive security breach earlier this year - after California-based CyberSource Corporation withdrew its offer for the company.
CyberSource said in September that it had signed a non-binding letter of intent to acquire the assets of CardSystems, but the California-based firm has now ended negotiations because of "the inability of the parties to reach agreement in a timely manner that created severe obstacles to closing the transaction".
Both Visa and American Express said they would ban CardSystems from managing transactions following a security breach in May that potentially exposed more than 40 million credit cards to fraud. MasterCard, which claims that its team of security experts traced a data breach - the largest ever reported - to CardSystems, gave the firm "a limited amount of time" comply with its own security requirements.
In the weeks following the disclosure CardSystems CEO John Perry admitted that the company should not have been retaining the records that were breached and had therefore violated data protection and storage rules established by MasterCard and Visa. But last month CardSystems presented the card companies with an audit saying it now meets the Payment Card Industry (PCI) data security standards.
Financial terms of PayBy Touch's acquisition offer were not disclosed. Under the deal, Pay By Touch will acquire CardSystems assets including the firm's payments platform which processes credit card transactions on behalf of more than 120,000 merchants.
In a statement John Rogers, founder, chairman and CEO of Pay By Touch, says: "We are eager to optimise the existing sales and marketing channels that have produced exceptional growth for CardSystems over the past several years. This will be an excellent addition to our existing Pay By Touch merchant services processing business.
"Additionally, Pay By Touch will work to offer its patented biometric products to CardSystems' independent sales organisations as a new feature for their merchant base."
The vendor said earlier this month that it had secured $130 million in new financing and that it had also acquired the assets of ATM Direct, which includes patent-pending software for online shoppers to securely use their PIN debit cards or ATM cards on the Net.