As the federal government considers new laws and regulations following the recent Target data breach, it’s important to consider who will unintentionally suffer. With any new laws or regulations, at times the good will have to suffer with the bad. This could be substantial, as nearly 70% of payments and purchases made in the United States are done with credit or debit cards. However, with Mastercard and Visa joining forces and showing a united front, perhaps it is time for the federal government to let the card industry have a say.
Even where a retailer is breached, our payments systems are designed to protect consumers with zero liability, fraud prevention, and fraud detection tools. While the subject of fraud and data breaches has been in the news lately, fraud accounts for less than six cents of every one hundred dollars spent on the payments systems. This only comes to one-tenth of a percent. The members of the Electronic Transactions Association (ETA) are the front lines of defense in the fight against financial crimes against consumers. ETA members detect and deter crime every day through innovative marketplace solutions while also complying with regulations from all 50 states and more than 20 federal agencies. The best and fastest way to protect the safety and security of consumers’ financial data is to allow payments companies and the merchants they serve to collaborate on industry standards and innovative solutions. While the federal government should have a say in rules and regulations, they should consult and seriously consider the thoughts and ideas of those in the cardholder industry, as those are the people on the frontlines when a breach happens.
One way that the ETA and credit card companies hope to deter fraudulent transactions is the implementation of chip and PIN cards in 2015. These cards are currently used in Europe, and while they are not completely hacker-proof, they do show lower instances of hacking. The cards are also great for those who travel overseas, as the new chip and PIN cards will make it easier to make purchases.
While the federal government is arguing over changes to laws and regulations regarding cardholder security, they need to consider the ideas of those in the cardholder industry. Mastercard and Visa have already teamed up to push quicker implementation of the chip and PIN card, and if all goes well they will be introduced in 2015. Congress does not have a good track record of passing new laws or regulations, and the card industry knows it. The federal government should let the card industry take control of the situation because it is liable to get worse before it gets better.