MasterCard Survey finds Consumers, Particularly Trend-Setting 18-34 Year Olds, Have Sights Set on Mobile Phone Payments

May 19, 2011 11:30 AM Eastern Daylight Time 

New Survey Finds Mobile Phones Are Taking on Even More Value in Consumers’ Lives - Many Now Even Want Their Phones to Replace Their Wallets

“2011 is the beginning of the NFC mobile payments era, and consumers are eager to get their hands on the first commercial deployments in the U.S.”

PURCHASE, N.Y.--(BUSINESS WIRE)--Increasingly, technology is changing what we consider possible, from unlocking a car from inside the house to recording a movie remotely. With this evolution, the mobile phone has become the most important technology accessory, with younger generations fueling this movement.

Consumers are now poised for the next step – using their smartphones as mobile wallets, according to a new survey by MasterCard Worldwide. The study, conducted by Kelton Research, shows 62 percent of Americans who use a mobile phone would be open to using their device to make purchases wherever their errands may take them.

“Consumers are already living a mobile lifestyle so using their phones to make payments on a daily basis is a natural next step,” said Mung-Ki Woo, group executive, mobile at MasterCard Worldwide. “2011 is the beginning of the NFC mobile payments era, and consumers are eager to get their hands on the first commercial deployments in the U.S.”

Younger Generations in Particular will Drive this Demand for Mobile Payments

Defined as a mobile generation with its pulse on digital trends, 18-34 year-olds are particularly ready to take their transactions to the next level:

• According to the study, 63 percent of 18-34 year olds would be at ease using mobile phones to make purchases versus those age 35 or older (37 percent).
• Consumers ages 18-34 (65 percent) feel more naked without their phones than their wallets, compared to 34 percent of those in the 35 and older group.

In a separate 2010 survey conducted by MasterCard Advisors, respondents under 30 years of age showed this demand has also been building for the past few years. This group is increasingly hungry for mobile payment options and access to their funds:

• Between 2009 and 2010, respondents showed a 67% increase (15% in 2009 to 25% in 2010) in the number of purchases made with their mobile phones.
• In this time period, this audience also increased their daily mobile phone access to their bank’s online banking service by 79% (14% in 2009 to 25% in 2010).

Perception is Important

This growing willingness to use a mobile phone for payments supports the role mobile phones play as a reflection of personality, and consumers’ desire not to carry a traditional wallet. According to the study, consumers value mobile phones not just for the functions they can perform, but for what they say about them too. Over half (54 percent) of respondents think that someone’s phone is more telling of their personality than their wallet.

“When credit and debit cards were first introduced, consumers welcomed the improvements they made to the speed, convenience and reliability of transactions,” said Woo. “Now with the mobile wallet ready to revolutionize this experience again, consumers have even more to gain as their phones take on additional functionality and value in their lives.”

Gender Divides How Consumers Evaluate Mobile Payments

As the mobile wallet goes mainstream, gender will play a role in how it’s perceived and used. While men see their phones as functional necessities, women take a more personal approach to their mobile devices. According to the survey, men tend to be more willing to use their phones for payment transactions, and they perceive the transactions in a positive way:

• More men than women (51 percent vs. 40 percent) who have a mobile phone would be at ease using it to make purchases.
• More men than women (49 percent vs. 45 percent) would be impressed by someone who paid a bill with a mobile application than with a credit card.

While women are slightly more conservative about mobile phone purchasing decisions, they highly value the content stored on their phones:

• Women more so than men (50 percent vs. 36 percent) feel more exposed without their mobile device than their wallets.
• Of women, 45 percent (vs. 34 percent of men) would rather have their phones than their wallets surgically attached so they’d always remember them when leaving the home.

Trust and Privacy are Critical to Consumer Comfort

Despite reliance on mobile devices and general consumer readiness for mobile payments, the survey revealed that overall safety is a significant comfort factor in the decision to pay by phone. Nearly two in three respondents (62%) said they need confirmation that their personal information is safe in order to be comfortable making a transaction, underscoring trust and privacy as paramount factors in changing payment behaviors.

Survey Methodology

The MasterCard Mobile Survey was conducted by Kelton Research between April 15th and April 22nd 2011 via email invitation and an online survey. Quotas are set to ensure reliable and accurate representation of the total U.S. population ages 18 and over.

About MasterCard Worldwide

As a leading global payments company, MasterCard Worldwideprides itself on being at the heart of commerce, helping to make life easier and more efficient for everyone, everywhere. MasterCard serves as a franchisor, processor and advisor to the payments industry, and makes commerce happen by providing a critical economic link among financial institutions, governments, businesses, merchants, and cardholders worldwide. In 2010, $2.7 trillion in gross dollar volume was generated on its products by consumers around the world. Powered by the MasterCard Worldwide Network – the fastest payment processing network in the world – MasterCard processes over 23 billion transactions each year and has the capacity to handle 160 million transactions per hour, with an average network response time of 130 milliseconds and with 99.99 percent reliability. MasterCard advances global commerce through its family of brands, including MasterCard(R), Maestro(R), and Cirrus(R); its suite of core products such as credit, debit, and prepaid; and its innovative platforms and functionalities, such as MasterCard PayPass(TM) and MasterCard inControl(R). MasterCard serves consumers, governments, and businesses in more than 210 countries and territories. For more information, please visit us at www.mastercard.com. Follow us on Twitter: @mastercardnews.

Contacts

MasterCard Worldwide
Joanne Trout, 1-914-249-6644
joanne_trout@mastercard.com

Mark Your Calendars: PYMNTS.com Exclusive Events

Exclusive Events 05.19.11 Electronic Payments: Six Supplier Savvy Steps Toward ePayment Success   Financial institutions are in a unique position to offer ePayment solutions and expertise to their clients and are now realizing the benefits of an enhanced ePayment program. On Tuesday, May 24, Syncada from Visa will host a live webinar where PayStream's Henry Ijams will discuss actions leading companies are taking within the ePayment landscape alongside necessary steps to avoid barriers that may hinder adoption. Read More | Sign Up   Taking Commerce to the Community: Finding, Igniting and Monetizing Mobile and Social Commerce  The MPD Payments Innovation Institute is back! The Summer Institute will focus on innovation driven by mobile and social commerce. Faculty is a mix of world-renowned business school professors, senior executives and entrepreneurs. Six modules will cover a range of critical questions on the minds of industry executives as they search for the "killer strategy" to ignite adoption of these two powerful enablers of commerce. Read More     Brussels Symposium on The Role and Regulation of Interchange Fees for European Payment Cards  Competition Policy International in concert with PYMNTS.com, is hosting a symposium on 15 June in Brussels where leading economists and current and former  officials will discuss a broad range of topics related to interchange fees at the Hotel Silken Berlaymont. Read More

NFC to Take Mobile Payments by Storm

POSTED BY KENNETH G. MAGES, ON MAY 18TH, 2011

NFC to take mobile payments by storm - EETimes India

Posted: 19 May 2011

IHS iSuppli predicts that the market for NFC technology for mobile payments will grow from just about 5 crore units in 2010 to almost 55 crore units per year by 2015. The NFC penetration projections have been revised based on recent efforts by U.S.-based cell phone carriers.

A faster market ramp, by about 10 crore units per year from 9.32 crore units in 2011, is supported by the recently announced agreement of three major U.S. wireless carriers to partner with leading credit card companies on a mobile commerce initiative, IHS iSuppli said.

AT&T, Verizon and T-Mobile have said they would work with Visa and MasterCard on their Isis joint venture, which was established to form a nationwide infrastructure for NFC-enabled mobile payments using mobile handsets in the U.S. The original announcement of the Isis joint venture in November 2010 did not include Visa and MasterCard.

With the participation of Visa and MasterCard, the Isis system will allow consumer credit card information to be securely stored on cell phones, and will use NFC as the communication protocol to facilitate the financial transaction.

The changes to the Isis initiative together with Google’s efforts to promote mobile payments with Android smartphones, has prompted IHS iSuppli to increase its forecast for global shipments of NFC-equipped cell phones. IHS now predicts 9.32 crore NFC-equipped cell phones will ship worldwide in 2011, up from the December forecast of 7.98 crore. In 2014, 41.18 crore NFC cell phones will ship, compared to 22.01 crore in the previous prediction. Shipments then will rise to 54.47 crore in 2015. This means that 30.5 per cent of all cell phones shipped in 2015 will have the capability to conduct mobile commerce using NFC technology, IHS predicted.

Worldwide Forecast of Cell Phones with Integrated NFC Capability.

“By partnering with the dominant players—Visa and MasterCard—the wireless carriers are making the right moves to create an ecosystem that will allow consumers to become comfortable with making NFC payments through their cell phones,” said Jagdish Rebello, director and principal analyst for communications and CE with IHS. “The carriers hope to leverage the dominant position enjoyed by Visa and MasterCard in credit card payments to ensure a seamless consumer experience when customers use their cell phones to make payments. Such a move will drive an increase in unit shipments of cell phones with embedded NFC capability in the U.S. and around the world.”

With NFC, consumers can pay their bus fare, buy a plane ticket or make an ATM/credit card purchase simply by holding their cell phones near wireless terminals.

Visa and MasterCard’s move to participate in Isis represents an attempt by the credit card companies to prevent Google from gaining a strong foothold in the market for mobile payments, IHS said.

With the addition of the major financial firms, the Isis effort is set to gain momentum over the long term. However, Isis is facing some short-term delays while it recalibrates its mobile payment strategy to suit Visa and MasterCard. It has delayed a Salt Lake City trial of the NFC technology from early 2012 to the third quarter of 2012. Similar trials are already underway in Nice, France and nine other major cities. In Nice the trial is supported by four carriers—Orange-France, SFR, Bouygues Telecom and NRJ Mobile.

- Peter Clarke

  EE Times

For more statistics and forecasts, click here.

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Juniper Global Mobile Threat Study Finds Security Vulnerabilites at "All Time Highs" for Mobile Devices

400 Percent Increase in Android Malware Found Since Summer 2010

SUNNYVALE, Calif., May 10, 2011 — In a global mobile threat study released today, Juniper Networks (NYSE: JNPR) found that enterprise and consumer mobile devices are exposed to a record number of security threats, including a 400 percent increase in Android malware, as well as highly targeted Wi-Fi attacks. Through close examination of recent malware exploits, the study outlines new areas of concern and delivers clear recommendations on essential security technologies and practices to help consumers, enterprises/SMBs, and government entities guard against mobile device exploits.

With smartphones set to eclipse PCs as the preferred method of both personal and professional computing, cyber criminals have turned their attention to mobile devices. At the same time, the gap between hacker capabilities and an organization's defenses is widening. These trends underscore the need for further mobile security awareness, as well as more stringent, better integrated mobile security policies and solutions.

"The last 18 months have produced a non-stop barrage of newsworthy threat events, and while most had been aimed at traditional desktop computers, hackers are now setting their sights on mobile devices. Operating system consolidation and the massive and growing installed base of powerful mobile devices is tempting profit-motivated hackers to target these devices," Jeff Wilson, principle analyst, Security at Infonetics Research. "In a recent survey of large businesses, we found that nearly 40 percent considered smartphones the device type posing the largest security threat now. Businesses need security tools that provide comprehensive protection: from the core of the network to the diverse range of endpoints that all IT shops are now forced to manage and secure."

The report, "Malicious Mobile Threats Report 2010/2011" was compiled by the Juniper Networks Global Threat Center  (GTC) research facility, a unique organization dedicated to conducting around-the-clock security, vulnerability and malware research tailored specifically to mobile device platforms and technologies. The GTC examines increasingly sophisticated attacks from 2010 and 2011, such as, Myournet/Droid Dream, Tap Snake and Geinimi as well as the pirating of the "Walk and Text" application, new threat vectors for mobile cybercrime, and the potential for exploitation and misuse of mobile devices and data.

Key Report Findings Include:

• App Store Anxiety: The single greatest distribution point for mobile malware is application download, yet the vast majority of smartphone users are not employing an antivirus solution on their mobile device to scan for malware
• Wi-Fi Worries: Mobile devices are increasingly susceptible to Wi-Fi attacks, including applications that enable an attacker to easily log into victim email and social networking applications
• The Text Threat: 17 percent of all reported infections were due to SMS trojans that sent SMS messages to premium rate numbers, often at irretrievable cost to the user or enterprise
• Device Loss and Theft: 1 in 20 Juniper customer devices were lost or stolen, requiring locate, lock or wipe commands to be issued
• Risky Teen Behavior: 20 percent of all teens admit sending inappropriate or explicit material from a mobile device
• "Droid Distress": The number of Android malware attacks increased 400 percent since Summer 2010

"These findings reflect a perfect storm of users who are either uneducated on or disinterested in security, downloading readily available applications from unknown and unvetted sources in the complete absence of mobile device security solutions," said Dan Hoffman, chief mobile security evangelist at Juniper Networks. "App store processes of reactively removing applications identified as malicious after they have been installed by thousands of users is insufficient as a means to control malware proliferation. There are specifics steps users must take to mitigate mobile attacks. Both enterprises and consumers alike need to be aware of the growing risks associated with the convenience of having the Internet in the palm of your hand."

In order to guard against growing mobile malware threats, the report recommends the following:

For Consumers:

• Install an on-device anti-malware solution to protect against malicious applications, spyware, infected SD cards, and malware-based attacks on the device
• Use an on-device personal firewall to protect device interfaces
• Require robust password protection for device access
• Implement anti-spam software to protect against unwanted voice and SMS/MMS communications
• For parents, use device usage monitoring software to oversee and control pre-adult mobile device usage and protect against cyberbullying, cyberstalking, exploitative or inappropriate usage, and other threats

For Enterprises, Government agencies and SMBs:

• Employ on-device anti-malware to protect against malicious applications, spyware, infected SD cards and malware-based attacks against the mobile device
• Use SSL VPN clients to effortlessly protect data in transit and ensure appropriate network authentication and access rights
• Centralize locate and remote lock, wipe, backup and restore facilities for lost and stolen devices
• Strongly enforce security policies, such as mandating the use of strong PINs/Passcodes
• Leverage tools to help monitor device activity for data leakage and inappropriate use
• Centralize mobile device administration to enforce and report on security policies

The Juniper Networks Global Threat Center is based out of Juniper Networks Mobile Center of Excellence located in Columbus, OH. The Malicious Mobile Threats Report 2010/2011 report can be viewed here.

About Juniper Networks

Juniper Networks is in the business of network innovation. From devices to data centers, from consumers to cloud providers, Juniper Networks delivers the software, silicon and systems that transform the experience and economics of networking. Additional information can be found at Juniper Networks (www.juniper.net).

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• Mobile Device Vulnerabilities at an all time high (brianpennington.co.uk)
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Credit Card Providers Leave EMV "Skimming Hole" Open, PIN Codes at Risk

Hackers can use stolen PIN codes along with stolen credit cards to rob bank accounts - PC Advisor

By Loek Essers | Web Wereld | 18 May 11

Security researches are urging credit card providers to fix a so-called skimming hole in their electronic payment protocol through which criminals can harvest PIN codes that can be used, along with stolen cards, to empty bank accounts. The security flaw can be mended by the credit card companies, but they don't think that it is necessary.

The skimming hole was found in the Europay, Mastercard and Visa (EMV) standard, a global standard for interoperation of bank cards that incorporate built-in chips. Criminals can use the security flaw to steal PIN codes, which in combination with stolen credit cards that work with the codes, can be used to rob the owners' bank accounts.

During the CanSecWest security conference in March this year a team of security researchers from Inverse Path and Aperture Labs revealed the skimming hole in the EMV protocol. They built a prototype skimmer device, also known as a "shim," that can be inserted in a point of sales (POS) terminal. The hole was revealed over a month ago and is still exploitable.  "We ... think this is a sign of weakness of the EMV protocol," said Andrea Barisani, chief security engineer at Inverse Path in an e-mail interview. "And its over-complexity and design flaws are one of the key features that our research is trying to point out." This method of skimming PIN codes is very hard "if not impossible" to detect, Barisani stresses.

EMV consist of two parts: an EMV chip that is embedded in credit cards, and the EMV standard, which handles the authentication of credit card transactions. The system was made to ensure security and global interoperability and continuing acceptance of credit cards. The EMV standard is managed by Visa, Mastercard, American Express and JCB International through the public corporation EMVCo.

In their paper "Chip & PIN definitely broken (PDF)," the Inverse and Aperture researchers reveal a hole in the system's verification process. It is possible to tamper with the Cardholder Verification Method (CVM) list that is contained in a file on the credit card. POS terminals will accept altered CVMs and this makes it possible for skimmers to harvest PIN codes of cards used in the skimmed terminal.

Barisani's research is verified by Ross Anderson, professor of computer engineering at the University of Cambridge. In February 2010 he published a paper about a similar flaw in the EMV protocol. Inverse Path and Aperture Labs used this paper as a basis for their research.

"The CVM downgrade attack is novel, and a useful discovery. It means that PIN encryption just isn't done properly in EMV, and the protocol should be changed to fix it," he said in an e-mail interview. "It wouldn't surprise me if the bad guys had also built such devices -- but as the banks now just dump the cost of fraud on cardholders, they're not looking very hard for trojanned terminals and it might be a while before we found out what was going on."

The credit card providers deny the hole is important and argue that it is only small part of EMV security. "In response to the report in March 2011 'Chip and PIN is Definitely Broken', it is EMVCo's view that when the full payment process is taken into account, suitable countermeasures are available," said the credit card providers in an e-mailed statement.

EMVCo argues that it is well known that PINs can be stolen by the use of a variety of techniques like PIN pad overlays, hidden cameras, shoulder surfing, bogus terminals and social engineering. Using a rogue shim is seen as "just another technique" that can be used for skimming.

"The mitigation against this threat is that no transaction can be performed without also stealing the card where card cryptography operations are required for a successful transaction. This allows normal lost and stolen payment system protections to apply. Conversely the mitigation against a genuine card being abused if lost or stolen is that the thief will not have access to the PIN, hence the PIN has a role to play despite the 'eavesdropping threat' and remains an important tool for protecting against lost and stolen fraud," EMVCo stressed.

Barisani confirms a card would have to be stolen to be used by skimmers. However the discovered security flaw can be easily fixed. "This is a bug/error that can be reasonably fixed with firmware updates (...) on the terminal side or by changing the EMV specification. The mentioned EMV Specifications 'security features' are insufficient or not correctly implemented and the room for downgrade attacks (like ours) is large," he Barsiani warned.

Anderson concurs. "There is a serious governance flaw in EMV, as in many other payment networks," he said.

Other organizations should also take responsibility in the matter, but a lack of coordination will hinder progress, Anderson noted. "EMVCo may have developed the standard but now that it exists it's in effect controlled by the vendors. Neither 100 vendors, nor 10,000 banks, are sufficiently coordinated to be capable of fixing anything," he said.

There is another problem, Anderson said. "Banks act slowly -- it takes years to reprogram systems and more years to replace the card base."

It is ultimately down to the bank regulators to set the rules, Anderson said. "For example, I have talked at a number of events organised by the US Federal Reserve urging them to not let EMV into the USA until the known bugs are fixed. As for Europe, it would be nice if the European Central Bank were to flex its muscles, but they do not seem to have any staff who understand technical stuff."

The European Central Bank declined to comment on the matter and pointed to the European Payments Council (ECP) for more information. The ECP also declined to comment.

Airlines Lose (a lot more than) $1.4 BILLION to Fraudsters

Editor's Note: When taking into account that revenue lost due to "Suspicion of Fraud" (3.3% vs. .09) it can be argued that potential lost revenue can actually be up to 3.6 times higher or up to an additional $5.33 billion dollars.  (see chart)

Global fraud rate down, but online ticketing still seeing challenges

MOUNTAIN VIEW, Calif., May 18, 2011 /PRNewswire/ -- Survey findings released today by CyberSource Corporation, a Visa company (NYSE: V) show that while airlines are gaining in their war against fraud, much work remains to be done.  Airlines reported a loss of about $1.4 billion USD to online payment fraud in 2010.

Dr. Akif Khan, CyberSource's Director, Products and Services said: "The good news is that in terms of fraud loss rates, 2010 results showed a 31 percent improvement over 2008.  Clearly, airlines have not only recognized the challenge but have made timely adjustments to it." According to the survey, changes made by airlines in the last two years include higher use of fraud detection tools in automated screening (7.3 on average, compared to 5.8 in 2008), along with rejecting more bookings due to suspicion of payment fraud.

Selected survey findings

--Experience counts:  airlines with less than three years of online selling experience have higher fraud loss rates, manual review rates, and higher reject rates than their more experienced competitors. For example, airlines with more than ten years of online selling experience manually review 15 percent of their bookings; those with fewer than three years review 53 percent.

--Airlines may be ignoring a powerful anti-fraud tool:  Only three percent of airlines surveyed used public record searches to validate bookings.  But those that used the tool felt it was one of their most effective anti-fraud measures.(Public record searches are not universally available). Device fingerprinting and third-party fraud scoring models were among the top tools merchants cited as considerations for future use.

--Automated review requirements will accelerate:  According to the International Air Transport Association, passenger revenue will increase by 7.3 percent in 2011, but nearly 90 percent of airlines surveyed say their manual review staff levels will remain the same. Automation will have to make up the difference.

"Fraudsters will move to the weakest link in the chain," said Christopher Staab, Managing Partner of Airline Information. "And that weak link is most likely going to be the airlines unfamiliar with how sophisticated fraud can be perpetrated with online ticketing sales.  That's why this type of data is so critical for the airline industry worldwide.  There are solutions out there-- airlines need to implement them."

A typical fraud scenario in the airline industry plays out as follows:  

1. Fraudster illegally obtains credit card data;
2. Fraudster obtains name, address, and other appropriate information for a genuine customer interested in buying "discount" tickets;
3. Fraudster buys the ticket in the innocent person's name, using the stolen credit card number;
4. Fraudster delivers ticket to the customer and receives payment in cash.

CyberSource announces new travel-specific fraud-tuning capabilities

CyberSource is also announcing release of new fraud detection algorithms for its Decision Manager system, created specifically for the travel industry. Data generated from inbound booking requests, including device identity and behavior information, is correlated with transaction data generated by merchants worldwide. The new travel algorithms take the unique purchasing patterns of the travel industry into account, where multiple bookings from frequent travelers or travel agencies are common. The results of these correlations can then be compared to business rules established by the airline to automatically accept, reject or review the booking. Because valid bookings can now be more accurately and automatically separated from fraudulent bookings, airlines and other travel companies can further reduce costly manual review and fraud loss.  

To see the full survey -- for journalists: please call or email the contacts listed below.   For all others: please visitwww.cybersource.com/airlinefraudreport

Methodology

The Airline Online Fraud Survey was commissioned by CyberSource Corporation in partnership with Airline Information. Data was compiled in an online survey delivered by an independent market research firm. The surveys were fielded between November 17, 2010 and January 31, 2011 and yielded 142 qualified completed interviews. 72 percent of respondents indicated their airline had total revenues over $500 million USD.

About CyberSource

CyberSource, a wholly-owned subsidiary of Visa Inc., is a payment management company. Over 330,000 businesses worldwide useCyberSource and Authorize.Net brand solutions to process online payments, streamline fraud management, and simplify payment security. The company is headquartered in Mountain View, California with international offices in Reading, U.K.; Singapore; andTokyo. CyberSource operates in Europe under agreement with Visa Europe. For more information, please visit www.cybersource.com.

© 2011 CyberSource Corporation, a Visa company. All rights reserved.

SOURCE CyberSource Corporation

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Debit Fee Compromise Offered by Senator Jon Tester

Tester Stands Up for Consumers, Offers Debit Card Compromise

Aims to Reach 60 Votes to Obtain Review of Embattled Fed Interchange Price Caps

Move comes as giant retailer shirks recent data security breach recovery onto card issuers, consumers

WASHINGTON, May 18, 2011 /PRNewswire/ -- On the Senate floor today, Senator Jon Tester (D-MT) announced that he would amend his Debit Interchange Fee Study Act (S. 575) to shorten the study period of Fed interchange price caps from two years to fifteen months.  Tester noted that the move is designed to attract the 60 votes necessary to overcome a filibuster by supporters of the Durbin debit card price fixing amendment.      

"Almost every day, a new voice speaks out in support of protecting consumers, community banks and credit unions," Tester said.  "We're close to having the votes now, but some have expressed concern about the length of the review process.  The fact is, how long the study takes is not as important as how thorough it is.  Once the facts are out, I have no doubt that reasonable people will agree about how dangerous these price caps are."  

Tester's announcement came as another example highlighted the consumer protections provided by debit interchange.  Michaels stores recently announced a data security breach impacting more than 100 million customers in 20 states across the nation.  Ironically, the breach was initially announced in Senator Durbin's home state of Illinois.  In response to consumer inquiries about the loss of sensitive financial information, Michaels directed customers to "contact their bank[s] immediately" for assistance.  

Losses due to debit card fraud are paid by the issuing banks rather than by the cardholders, and the Michaels incident illustrates how the current system works for the benefit of consumers and merchants as fraud protection and data security are included in the interchange fees retailers pay to card issuers.  If the current proposed rule were in place today, financial institutions would not have the resources necessary to guard the security of the networks or to protect consumers from the extensive harm that can result from the violation of their personal information such as fraud and identity theft.

"If the current rule goes into effect, retailers will pass on the costs of fraud protection and data security to consumers," said Trish Wexler, spokeswoman for the Electronic Payments Coalition.  "If a breach does occur, retailers will get off scot free, even if they are responsible for the loss.  This is just another example of why we need to slow this rule down and get it right before it is too late."

About the Electronic Payments Coalition

The Electronic Payments Coalition (EPC) includes credit unions, banks, and payment card networks that move electronic payments quickly and securely between millions of merchants and millions of consumers across the globe. EPC's goal is to protect the value, innovation, convenience and competition in today's growing electronic payments system. EPC educates policymakers, consumers and the media on the system's role in economic growth, and the importance of protecting consumer choice and stability for the continued growth of global commerce.

SOURCE Electronic Payments Coalition

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