In an industry that has drawn the ire of consumers, it is important to recognize how widespread credit card breach is (and how much we need credit card legislation). Target has gotten the most publicity, but smaller businesses sometimes go unnoticed. Both share a common problem with credit card and identity theft.
Time for Congress to approve the right credit card legislation.
The Electronic Transactions Association (ETA) is bringing awareness to the inconsistencies of breach reporting that is controlled at different levels of our government. Currently, there are state and local laws that interfere with who is reported, what is reported, and when it is reported. Congress is considering a few different proposals.
The ETA is also lobbying to keep our government out of regulating payments technology standards and to allow the industry to drive these standards. They are urging people to become aware and involved in the credit card legislation affecting the payments industry through their program, The Voice of Payments.
Payment technology and credit card standards make progress.
Visa and MasterCard have agreed to team up, in order to provide consumers a more secure solution. The group, consisting of banks, credit unions, retailers, trade groups and terminal manufacturers, will oversee the transition to an EMV (Europay, MasterCard, and Visa) standard and create security protocols. EMV is the chip and PIN credit card solution that will replace the current magnetic stripe by October 1, 2015. Consumers stand to gain a higher level of security because information will be encrypted in the chip instead of the magnetic stripe.
The payments industry is so vast that these major players need to work together through conflicting interests, in order to develop the best solution for consumers. Visa, in particular, has been outspoken against the use of a PIN, because of the lack of infrastructure and high implementation cost in the U.S. Byron Pollitt, CFO of Visa, was quoted as saying,
“Our view is it is chip and choice, and that PIN could well be a red herring here because two-thirds of retailers in the United States do not have a PIN pad with their POS terminal, two-thirds. And so if PIN were to be included as a fix at the same time, in our view, it would dramatically slow the rollout of EMV, which is chip, and chip is what gets you to 70 percent of the fraud. The lost and stolen is addressed by PIN.”
However, PIN has long been part of the standard in the rest of the world. Visa, instead, would prefer to use a more cost-effective method like signature authentication.
In addition to credit card legislation, one specific example is surcharging. This charge is an additional fee that is placed by a merchant or business and charged to a consumer for the privilege of using a credit card for their purchase. Credit card processing companies or merchant services companies will charge the merchant a fee for accepting credit card payments.
There are 4 states that it is currently illegal to implement a surcharge: Kansas, Colorado, Connecticut, and Massachusetts. Overall, credit card surcharge legislation is moving in the direction of being legal everywhere.
Our industry is in desperate need of rebuilding consumer trust. The first steps are in the right direction: building awareness and security.