How Credit Card Companies Are Enhancing Payment Security

Read original story on: WSJ

Major credit card companies are finally stepping up their game in payment security: Visa is reportedly expanding tokenization to devices beyond iOS ones, and MasterCard plans to spend $20 million on developing biometrics and fingerprint matching to strengthen its mobile payment security.

As mobile payments begin to gain traction, mobile devices now reportedly make up a disproportionate share of up 21 percent of all fraud costs that merchants and card issuers suffered each year. Amid such high fraud concerns, it’s only sensible for credit card companies to beef up their security measures.

TechWreck: Ten Credit Card Breaches of 2014 (So Far)

Given the well-publicized Target security breach last December, you’d think businesses would have been warned to take extra care when it comes to protecting consumers’ payment info. But alas, news about credit card breaches just keeps on coming. And here is a quick review of ten major breaches in the U.S. this year so far:

On Jan 10, upscale retailer Neiman Marcus announced that it started an investigation on a hacker break-in that had compromised an undisclosed large number of customer cards.

On Feb. 7, White Lodging, a company that maintain national hotel brands including Hilton, Marriott, Sheraton and Westin, issued a statement acknowledging a payment data breach at 14 hotels that exposed credit and debit card information on thousands of its guests.

On Mar. 2, National beauty products chain Sally Beauty became the latest victim of a breach targeting their payment systems in stores, with 15 stolen credit cards sharing a similarity of being used recently at various Sally Beauty locations.

On Mar. 28, Liquor store chain Spec’s announced that more than half a million customers at 34 stores owned by the company may have had critical financial information stolen in a sophisticated computer scam.

On Apr. 17, Michaels Stores, the largest arts and crafts chain in the States, acknowledged that a security breach, first reported back in January, had affected up to 3 million customer credit and debit card accounts.

On July 9, More than 10,000 customers of The Houstonian Hotel, Club & Spa in Texas was notified that their payment cards had been compromised in a “malicious software attack”.

On July 18, financial institutions across the country reported that multiple locations of Goodwill Industries stores have been identified as a likely point of compromise for an unknown number of credit and debit cards.

On July 23, local restaurant group claims in Delaware claimed that an undisclosed number of Delaware restaurants have been affected by a credit card breach that compromised its point-of-sale software.

On July 31, Sandwich Chain Jimmy John’s reported that it started working authorities to investigate a security breach involving its customers’ credit card data. The scope of this breach has yet to be confirmed.

On Aug. 6, Chinese bistro chain P.F. Chang’s confirmed that 33 of its restaurants across the country revealed were affected by the credit card breach, after two months of investigation since the discovery back in June.

Amazon Challenging Square With New Payment Service

Amazon new credit card processing service for small businesses, known as Amazon Local Register, marks Amazon’s continued expansion into mobile payments following its recent Amazon Wallet launch. This could seriously undercut Square’s current market dominance by offering a lower processing rate and a $10 smartphone cardreader. As the payment war heats up, more competitors can be expected to join.

Why Square May Be The Herald Of Next-Gen Credit Card Tech

Square, maker of the popular smartphone-supported credit card reader, is embracing the trend in card payment tech by moving away from the good ol’ swipes to the far more convenient taps. As all major credit card networks, including Visa, Mastercard, American Express, and Discover, start urging merchants to accept cards that work via embedded chips rather than the traditional stripes primarily for security reasons, this transition seems like a smart move for Square. But to take full advantage of the impending change and prove itself as a true herald, Square would be wise to quickly adapt the PIN-based security measure that will soon come with the new cards, also know as “chip-and-PIN” cards outside U.S..

MasterCard Protects Purchases Via Location

MasterCard is debuting a new program that protects purchases made on credit cards based on smartphone location. In partnership with Syniverse, the program lets customers protect purchases made in foreign countries unless their smartphone is also in that location. It limits fraud, and takes the toll off of call centers, in that customers don’t have to call banks to alert them to travel plans. The system simply sees that you’re in the same place as your purchases, and clears them. As far as privacy of location is concerned, MasterCard says that the program is only opt-in, so there’s no automatic activation. It’s also said that it will be combining the program with select offers for specific locations, so users in the program can expect to see coupons and offers for things around them, a key step forward for brands looking to work with MasterCard on digital campaigns. 

Microsoft Announces Bing Offers Test

Microsoft today debuted Bing Offers, which is a Card-Linked program that saves credit card details for automatic discounts. Called “Bing Offers Card-Linked,” the program is based on a partnership with transaction processing company First Data, as well as credit card networks like Visa and MasterCard. The goal is to leverage the “offers” space, which is vibrant, but customers can’t easily take advantage of the variety of offers thrown at them. Microsoft figures that if it can store card and offer information in one, easy-to-access location, users will have a very simple way to utilize digital interoperability, without a lot of the friction that third party systems offer. By signing up, offering your Credit and Debit card information, and simply shopping through Bing, you’ll be automatically reminded of updates and offers. 

New Fees in the Future For Credit Card Users

An anti-trust suit from 2005 has finally been settled between merchants, credit card companies, and banks to allow retailers in 40 US states to add surcharges on credit card purchases.  These fees are still illegal in California, New York, Texas, and seven other states.  The fees are optional for retailers, and there will be no fee on debit card purchases, but if you often pull out the plastic, that 1% cash back might not be worth it much longer.