Claws and Roars: Target, Neiman-Marcus, and Beyond
More to Report on the Target Breach and Its Fallout
As Karen Webster, a columnist from Pymnts.com, wrote, the Target data breach may be old news to many, but the impact of those responsible for this breach will reverberate throughout the payments industry for years to come, emphasizing the importance of payment security. And, the marks left by the ‘terrible claws’ on the future of retail payments and consumer payment habits may in fact become indelible.”
The “Claws” and “Roars” Analogy
The “claws” and “roars” she mentions were references to Maurice Sendak’s “Where the Wild Things Are,” a work she cites at the beginning of her article, referring to the wild ride ahead for the payments industry.
Scope of the Breach and Impact on Customers
The full scope of the breach was unknown, but it has since been revealed that it impacted other retailers, including Neiman-Marcus (and some others yet to be named). In the case of the Target hack alone, it has been discovered that data from over 110 million customers could have been stolen, exceeding the original estimate of 40 million.
Customers’ Reluctance to Use Debit Cards
According to Webster, customers might exhibit more hesitancy to use debit cards in the future when compared to credit cards. Customers are reluctant due to the perceived stronger fraud protection offered by credit cards. With credit cards, they do not have to worry about waiting for money to be restored to their accounts if any issues arise. She also addresses the question about whether EMV standards — those cards used abroad which have chips in them for information coding, instead of magnetic strips — could have stopped such a large scale breach from happening.
Security Concerns in Online Transactions
“Many say that ‘if only’ the U.S. had implemented EMV the Target breach wouldn’t have happened. Certainly, EMV cards are more challenging and costly to clone into physical cards. Particularly if customers mainly used credit cards and lacked EMV cards. Except that there’s one big problem: the bad guys now have a lot more places to use stolen card information – like millions of online outlets where they can buy stuff and/or buy stuff and return it for cash at physical stores. And, the facts bear this out.
Impact on Brands and the Payment Industry
John Stephenson is a portfolio manager at First Asset Investment Management. In a recent interview, he said that he doubted the recent meant more people would suddenly start using cash, instead of plastic. “This is America we’re talking about,” he says. “Of course they’re not going to start using cash more frequently.”
However, he believes that the “brands” of the affected places, not the card issuers themselves, will bear the impact. Stephenson, according to one article, “sees the recent credit card trouble as a problem for retailers like Target and Neiman Marcus, not for processing companies like MasterCard or its larger rival, Visa.”
Protecting Your Brand and Ensuring Security
With all of this in mind, how can you protect your brand? Make sure you’re up-to-date on all the security protocols for the types of payments you already accept. If you want to make it easier for customers to pursue alternatives, like eChecks or prepaid cards, AVPS can help with that, as well.
We of course, will continue to follow the “roars,” “claws,” and overall fallout from this still-unfolding story in the weeks and months ahead. And as the industry, and AVPS, continue to update their own procedures, we will keep you posted.
However, if you wish to begin strengthening your payment security, take action today and contact your AVPS representative.