Evan Schuman's StorefrontBacktalk

In the words of U.S. District Court Judge David G. Campbell, who handled the most recent legal round: “TSYS asserts that the 1-800 number awarded to EPS by the arbitrator does not exist, and that EPS’s merchants in fact are connected to TSYS through seven 1-800 numbers that are shared with hundreds of thousands of non-EPS merchants. TSYS argues that giving EPS control over these numbers will put these third parties at risk and will cause TSYS to be in breach of its other client contracts.”

Too late, Judge Campbell ruled last week—you should have brought up that issue during arbitration, when you knew about it and EPS and the arbitrator didn’t. Now you’re obliged to turn over control of all seven of those toll-free numbers to EPS.

To recap: TSYS started out believing it was owed $1 million in 2007. Three years later, it owes $2.6 million and seven phone lines, and has a lot of explaining to do to the merchants using half a million of its POS terminals. And EPS is still using TSYS’s services, at least until TSYS gets all the EPS merchants on the same toll-free line and gets those other TSYS customers off that line. Got all that?

Yes, it’s a ridiculous situation. It arose from a promise that TSYS never intended to keep, and has just gotten messier as TSYS kept trying to wiggle out of the situation.

It’s that sort of behavior that makes retailers and acquirers a little queasy. After all, they depend that payment processor. If the processor’s business judgment is poor and corners are cut in one area, who knows what else may be happening along the way?

That’s the real risk for the retailers caught in the middle of what, remember, started out as a billing dispute. They simply don’t know what’s going on. They have to trust their processor.

In this case, money—and time—will eventually solve the problem. TSYS may not be happy renting a new toll-free line and sending out new POS terminals programmed to use that line to EPS’s 56,000 customers. But if TSYS is smart, it’ll start doing that now, because even if it ultimately wins in court, it will still have to somehow disentangle EPS’s merchants from its system.

On the other hand, if TSYS was smart, it would have started doing that years ago—and probably would be done by now.