Visa, MasterCard will shell out millions to beef up cyber defenses

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Robert Hackett

After a rash of high profile cyber attacks against U.S. businesses, Visa and MasterCard have announced plans to boost their security measures.

MasterCard will spend some $20 million on its efforts, while Visa plans to expand its Visa Token Service.

News of the increased measures comes on the dayPresident Barack Obama is set to sign an executive orderdesigned to encourage companies to share more information about cyber security threats with the government, and with each other. The plan, which Obama is expected to sign at a cyber security conference in Silicon Valley, follows a high-profile attack on Sony  SNE 0.70% Entertainment late last year.

MasterCard  MA -0.41%  intends to beef up its biometrics — including fingerprint and voice authentication — by testing them in a more than $20 million trial program this year. The credit card company also plans to release added monitoring security with a product called MasterCard Safety Net in the spring. That tool will use algorithms spot and block fraudulent transactions as they’re taking place.

“With SafetyNet we are really fast tracking the next generation of security solutions, which are designed to stop fraud or attacks before many of our partners have even noticed it is happening,” said Ajay Bhalla, president of enterprise security solutions president at MasterCard, in a statement.

“We can do this because MasterCard’s SafetyNet operates as intelligent technology which can identify fraud in real time and decline a transaction before any exposure takes place.”

Visa  V -0.59%  also has plans to ramp up security by building out its Visa Token Service, which it launched in October.

The service, currently used by hundreds of financial institutions, helps reduce the risk of identity fraud by substituting information on cards — such as account numbers — with a digital account number that excludes sensitive payment account details.

“Removing card account numbers from the processing and storage of payments represents one of the most innovative and promising technologies we’ve seen in decades,” said Visa CEO Charlie Scharf in a statement. “This, combined with chip card technology, advances in account holder authentication through analytics and biometrics, and more sophisticated risk monitoring, will allow Visa account holders to enjoy new, secure payment experiences.”

Friday’s cyber security “summit” will consist of top government officials and high-level executives from companies such as Apple  AAPL -0.40% , American Express  AXP -2.72% , AIG  AIG 2.66% , Pacific Gas and Electric  PCG -3.21% , and others. (The CEOs of Google  GOOG 0.90% , Yahoo  YHOO 1.10% , Facebook FB -0.91% , and Microsoft  MSFT 1.21%  will not be in attendance, although they have sent delegates from their security teams instead.)

These payment protection plans follow a series of data breaches that have imperiled the credentials of customers at a number of companies. Most recently, health care insurer Anthem  ANTM -0.80%  suffered one of the largest attacks against the health care sector. Other recent victims include Target  TGT -0.54% , Home Depot  HD -0.63% , and JP Morgan  JPM 0.07% .

Visa, Nike y Goldman Sachs se estrenan hoy en el Dow Jones de Industriales

El cambio, que se hará efectivo desde el inicio de la sesión de este lunes, es el más importante en este índice en casi diez años.

 Las compañías Nike, Visa y Goldman Sachs se estrenan hoy en el índice Dow Jones de Industriales de la bolsa de Wall Street, donde ocuparán el lugar de Alcoa, Hewlett-Packard y Bank of America.

El cambio, que se hará efectivo desde el inicio de la sesión de este lunes, es el más importante en este índice en casi diez años.

La modificación se debe al intento del Comité de Índices de diversificar los sectores y los grupos industriales representados en el indicador, así como a los bajos precios de las tres empresas que han sido sustituidas, según explicó esa entidad al anunciar el cambio el pasado día 10.

Así, el fabricante de ropa y accesorios deportivos Nike sustituirá al gigante del aluminio Alcoa, que formaba parte del Dow Jones desde hacía 54 años.

La emisora de tarjetas de crédito Visa ocupa el lugar de la tecnológica Hewlett-Packard, que entró en el índice en 1997; mientras que Bank of America dejó su plaza a Goldman Sachs tras cinco años en ese indicador.

Las tres empresas que han salido del índice de referencia de Wall Street habían tenido un rendimiento menor al de los mercados durante los últimos años: Alcoa llevaba una pérdida acumulada en los últimos cinco años del 71,4%, Bank of America del 54,6% y HP del 50,7%.

Éste supone el mayor cambio efectuado en el Dow Jones desde abril de 2004, cuando la aseguradora American International Group (AIG), la farmacéutica Pfizer y la operadora Verizon reemplazaron a la operadora AT&T, la empresa fotográfica Eastman Kodak y la papelera International Paper.

Desde entonces se han ido producido múltiples modificaciones, la más reciente de las cuales tuvo lugar el año pasado, cuando la aseguradora médica United Health sustituyó a la empresa de alimentación Kraft, ya que ésta se hizo más pequeña tras dividir su negocio de alimentos en Norteamérica.

www.emol.com

New Credit Card Swipe Fee Rules Are Good News For Shoppers

There’s much ado about the pending court ruling that would allow retailers to pass on credit card transaction fees — or swipe fees — to shoppers. But consumers should stop worrying they’ll pay more for purchases. This is good news for pretty much everyone, except the credit card issuers.

First the law. Last year Visa and MasterCard settled a legal dispute with a group of merchants claiming collusion on the part of credit card issuers in fixing swipe fees, the amount the credit card companies charge a merchant for each transaction. As part of that settlement, the credit card companies had to allow merchants the freedom to pass along swipe fees to customers if they choose to do so.

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And there’s the kicker. If they choose to do so. Because credit card companies have always charged a swipe fee, one that was paid by retailers per transaction to cover the cost of equipment and processing.

The change does not effect debit cards or apply in any of the 10 states that already prohibit merchants from adding a surcharge to purchases.

Most retailers won’t pass that fee on to shoppers. The biggies, including Walmart and Target have declared there won’t be any change to how they do business. Shoppers will continue to shop and swipe and pay the standard price for products.

So why is this a good thing? First off, it opens up marketing and promotional opportunities for merchants. There’s talk of offering discounts for shoppers who chose to pay in cash. Stores may offer incentives to shoppers who use alternative forms of payment such as debit cards or PayPal. The eBay-owned PayPal is already available as an in-store payment option at several large retailers including Home Depot and Dollar General.

Listen, I’m not a credit or banking expert, but I do know a little something about how retail works. Merchants want more business not less. Credit card reform gives them more weapons in their competitive battle to boost sales and build loyalty. Many offer private label card credits — or store specific cards — and could use swipe fees to steer shoppers toward these products. Small businesses that currently don’t accept credit cards, could begin doing so as a convenience to shoppers willing to pay a premium for the pleasure.
There’s a component of the case that has retailers worried, a portion that fails to limit how much credit card companies can raise these fees. But again, sky-high fees may just help fuel more competition and better payment options.

Most shoppers will never pay an added swipe fee, merchants aren’t in the business of voluntarily alienating shoppers. But simply having the option of passing along these fees opens up all sorts of possibilities that will be good for merchants and shoppers. Just not the credit card issuers.

www.forbes.com