- On Friday, responding to various data breaches at retailers such as Target and Neiman Marcus, as well as U.S. Congressional hearings; Visa and MasterCard announced a cross-industry effort (which includes banks, credit unions, retailers, point-of-sale device manufactures, and trade groups) to improve the security of payment transactions. The group will initially focus on increasing the adoption of EMV integrated chip technology oncredit and debit cards as an alternative to the magnetic strip that is widely used in the U.S.
- Ryan McInerney, president of Visa Inc. said “The recent high-profile breaches have served as a catalyst for much needed collaboration between the retail and financial services industry on the issue of payment security … As we have long said, no one industry or technology can solve the issue of payment system fraud on its own.” Chris McWilton, president of North American Markets for MasterCard said, “One of the critical roles we play is to protect consumers and businesses against criminals and fraudsters … Only through industry collaboration and cooperation will we address the real and immediate issue of security and maintain consumer confidence and trust.”
- At the same time, Mallory Duncan, general counsel for the National Retail Federation said the solution might be a “half-baked solution … we remain insistent that U.S. retailers' customers be given the same protections as consumers in more than 80 countries who have both a chip and a PIN securing their credit and debit cards."
The problems of data breaches and identity theft are well understood, but implementing solutions will require banks, payment processors and retailers to spend billions of dollars to upgrade their systems and point of sales terminals. At the same time,
- on-line shopping continues to increase,
- interest in using smartphones as an alternative to credit and debit cards continues to expand and
- hackers and cyber-terrorists continue to innovate.
These dynamics should continue to drive demand for a broad set of data security related products and services.