Public mistrust and outrage over several recent data breaches have focused mainly on retail giants that were hacked. However, several security experts are now saying that the credit card industry itself is also to blame.
Over a decade ago, major credit card companies — including American Express, Discover, MasterCard, and Visa — launched a preemptive strategy to combat data thieves and hackers amidst growing public concern over cyberattacks. In 2001, businesses were required to meet a strict checklist of security criteria to prove they were taking measures to protect the personal credit card data of their customers.
Unfortunately, the security measures imposed by credit card companies failed to prevent an increasing number of cyberattacks against retailers during this past year. Home Depot and Target — two of the largest retailers affected by data breaches — claim they adhered to the security measures prior to hackers stealing the credit and debit card data of 96 million consumers from their computer systems.
It’s been debated whether complying with the credit card industry’s security regulations has been effective in protecting consumer information. However, the security tests have been instrumental in how credit card companies are attempting to keep consumer payment information secure. The credit card industry claims the tests provide insight as to how well a business is protecting its computer system, and those who meet all the security guidelines are still vulnerable to data breaches.
In an effort to minimize and prevent future cyberattacks, the credit card industry has began issuing credit cards embedded with a microchip and PIN access code, as opposed to the traditional magnetic stripe. This new technology is designed to make it more difficult for purchases to be made with stolen credit card data, or for hackers to create counterfeit cards.
With the release of the highly anticipated iPhone 6 and iPhone 6 Plus, Apple has entered the data breach foray with a possible solution: Apple Pay. This mobile payment method allows consumers to pay for their purchases using their smartphone or other mobile devices, such as iPads and the new Apple Watch. Consumers don’t even have to open an app thanks to innovative near-field communication (NFC) technology used by both the iPhone 6 and participating retailers. One swipe is all it takes.
Apple Pay is said to be more secure than traditional payment methods due to its use of NFC technology and fingerprint identification. However, not all businesses are so quick to jump on the Apple Pay bandwagon. Retailers such as Walmart and Best Buy have opted out, choosing instead to offer their own form of mobile payment, CurrentC. However, CurrentC recently suffered its own data breach when hackers were able to break into the system and steal consumer email information, raising several eyebrows.
As the winter holiday season rapidly approaches, retails are preparing for consumers to empty both their traditional and mobile wallets. Forecasts for consumer holiday spending are surprisingly positive, with consumers expected to an average of $781 on Christmas and holiday gifts, the highest figure in nearly six years. Despite concern over data breaches, consumer optimism is high as the economy continues to pick up speed. In fact, credit card debt accounts for just 5.5% of total household debt in the United States.
While the debate over secure methods of payment will continue for quite some time, consumers are eager to spend and use their hard-earned cash, plastic, and mobile payment methods on gifts for the upcoming holidays.