Cardholders around the world received a shock late last week when Global Payments Inc. announced a breach in its card data processing system.  After all, the company is one of the biggest processors of Visa (NYSE:V) and MasterCard (NYSE:MA) card transactions, and also processes a sizable number of transactions for Discover Financial (NYSE:DFS) and American Express (NYSE:AXP).
But don’t worry too much if you are a debit or credit card user. The breach has only exposed a small fraction of the total cards in use. Even if you are among the unlucky few, remember that you wouldn’t be liable for any unauthorized transactions on your card. Of course, how the card companies handle this incident has raised concerns about the safety of card payment systems remains to be seen.
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Global Payments: Your Money Is Safe
And so is your private information, if Global Payments is to be believed. Global Payments works as one of the intermediaries in a card transaction, and is what actually authorizes a charge. It then merely passes on transaction details to card networks like Visa and MasterCard.
In a followup announcement, the card processor disclosed that the breach allowed hackers to gain less than 1.5 million card numbers.  While an alarming number, this is but a fraction of the nearly one billion cards in use in North America – the region affected by the incident.
That said, Global Payments maintains that while the information stolen can be used to create counterfeit cards, sensitive personal information including the name, address and SSN have not been compromised. And with the card providers already in the loop about cards affected, chances are you won’t need to do anything regarding this incident.
But Who Guarantees That In the Future?
Visa became the first company to act against Global Payments when the company removed the latter from its list of approved service providers. This just means that Global Payments will end up paying Visa more for processing transactions. We believe that this will not affect Visa’s fee income much, as the increase in per transaction fees from Global Payments will be offset by the lower transactions processed by the company following the incident.
But the more serious concern is whether or not this can be put aside as a one-off incident. The growing dependence on plastic really puts a lot at stake, and this incident brings to light the fact that sensitive information can be breached at any point in the long chain of companies that handle this information.
It looks like all companies involved need to get their act together to ensure that sensitive information remains hidden from prying eyes.Notes: