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The relationship between ISO Electronic Payment Systems LLC and TSYS Acquiring Solutions has weathered a conflict the two companies had when the ISO converted a merchant portfolio to TSYS.
In a dispute dating back to 2005, a U.S. District Court in Arizona last week upheld an arbiter's Jan. 20 ruling that a TSYS Acquiring Solutions contract with ISO Electronic Payment Systems LLC violated the Arizona Consumer Fraud Protection Act.
Unless it appeals TSYS Acquiring, a unit of Columbus, Ga.-based Total System Services Inc., faces paying Electronic Payment Systems approximately $3 million, Anthony S. Maley, the ISO's chief operating officer, tells ISO&Agent Weekly. TSYS Acquiring also would have to write off nearly $1 million in other fees it has assessed the ISO, Maley says.
In January, arbiter Robert J. Corcoran found that TSYS Acquiring failed to provide the ISO with a copy of the transaction pricing it agreed to with Merrick Bank Corp., a Draper, Utah-based sponsoring bank. The arbiter also found TSYS Acquiring did not disclose some merchant statement fees, increased fees without notifying Electronic Payment Systems, prevented the ISO from disputing charges for electronic monthly-statement files unless it paid the "full undisputed amount," and hid help-desk support fees in a "lengthy, convoluted pricing schedule that TSYS representatives had difficulty interpreting."
The two companies began working together following a breach in 2005 at Electronic Payment Systems' previous processor, CardSystems Solutions.
"Without us being informed, they were changing the pricing with Merrick and making us pay for it," Maley says. "We always did our own statements, but they charged us for [providing] statements."
The conversion of Electronic Payment Systems' nearly 22,000 merchants to TSYS Acquiring did not go well, Maley says. "The transition was anything but seamless," Maley says. "It was a complete nightmare." Maley attributes the loss of 10,000 merchants from that portfolio to other ISOs to the conversion, though his company has since recovered, he says.
Court records show TSYS began arbitration proceedings in February 2007 to resolve its billing disputes with Electronic Payment Systems, which requested a summary judgment following Corcoran's Jan. 20 decision. A court makes a summary
judgment to decide a case without a full trial.
The U.S. District Court's Oct. 22 ruling leaves TSYS two options, Maley says. It can appeal the judgment to another court or potentially ask the U.S. Supreme Court to hear the case. A spokesperson for TSYS says the company does "not comment on litigation matters."
Electronic Payment Systems continues to process with TSYS Acquiring, a relationship Maley now says is "much smoother." A byproduct of the dispute is that Electronic Payment Systems understands much better how TSYS Acquiring works, he says.
"We've developed our own manual to function within these systems. We have our own systems to track what's going on. We don't need to call on them that often for their expertise," Maley says.
