2014/01/21

Privacy And Consumer Faith On Retailers' 2014 List Of Worries

NordstromAt the National Retail Federation’s annual convention held this past week in New York City it was evident that there were two real worries that retailers have for 2014.  The first is the complex question of privacy and the second is the keeping the consumer’s faith and delivering promised products on time.
Blake Nordstrom, President and CEO of Nordstrom said that the delivery problem may have been caused by UPS and FedEx but it is the responsibility of retailers to fix the problem and to reassure their customers that it will not happen again. Many thousands of packages were left behind and not delivered on Christmas Eve, and it was a real disappointment for many customers and their families across the country.
Mr. Nordstrom is right.  His views also apply to the hacking of bank cards. It is the responsibility of retailers to fix the problem. We know that the privacy of about 70 Million Target customers was violated and an estimated 10 million customers of Neiman Marcus suffered the same fate. At this writing it is rumored that three other retailers also experienced identity thefts during the same period. The problem was discussed by retailers in many closed door sessions during the convention.
As I understand it, the technology called EMV is ready to be used in the United States, but retailers, banks and especially the providers of bank cards (Master Card, Visa, Discover, etc.) cannot agree on who will pay for the conversion of the existing credit cards. Including a chip and a personal pin number with each credit card is essential to reduce access to cards by thieves.  I witnessed another approach during my recent trip to France and Germany.   I found that all restaurants have a small device waiters bring to the table to swipe a credit card – this way the customer never loses sight of his card thereby preventing unauthorized usage.
During the NRF convention I met with members of Ingenico, a French billion dollar point of sale hardware company that was an exhibitor. Their “On-Guard” system is a secure, all inclusive, point to point card with data encryption. According to this company their cards are fully protected and secure. On-Guard shifts responsibility for transmitting and storing cardholders data away from the merchant to the acquirer/processor. As part of integrating data security strategy On-Guard is said to be the most powerful protection solution for point to point encryption and tokenization of payment data. Every Ingenico card in Europe now has a chip that has a personal pin number that customers use on their shopping sprees.
There are other providers of point of sale hardware, and I cite Ingenico only because it has an operating system that is working. I am sure that every system has advantages, but the bottom line for me is that something has to be done in 2014 that is effective and reassures customers that their cards are safe.

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