Regulators: First Data Lags in Y2K Compliance
The agreement with federal financial institution regulators covers the Envoy system of the company's Nashville-based First Data Merchant Services unit, which services more than 200 banks, thrifts and credit unions. First Data is the largest U.S. processor of consumer payments to merchants. The Nashville system processes 9 percent of FDMS' daily merchant authorization and/or capture volumes.
According to the banking agencies that make up the Federal Financial Institutions Council -- the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp., National Credit Union Administration, Office of the Comptroller of the Currency and the Office of Thrift Supervision -- FDC's systems weren't meeting testing and implementation milestones that are part of the interagency guidelines the council developed in 1997.
FDMS provides merchant processing services for Visa, MasterCard and other credit and debit cards in retail, hospitality, supermarket, direct marketing and healthcare industries.
"[The council's] concern was that the conversion schedule had been delayed and the existing system was not year 2000-ready," said FDC spokeswoman Colleen Emigh.
First Data officials expect the company to meet the deadlines.
"We have remediated 93 million lines of code and are engaged in unprecedented levels of client testing," said Charlie Fote, FDC's president/chief operating officer. "Based on our year 2000 remediation experience, we are confidant in our ability to quickly complete testing and finish the remediation of the Nashville platform as planned."
Within 15 days, First Data will submit a written report of how it will fulfill the agreement and then update its progress regularly.