Merchant Link SecurityCents

A blog that comments on the latest developments in the world of payments, payment data security and technology, PCI compliance, and more.

Posts Tagged ‘ nrf12 ’

By Yu-Ting Huang, Director, Global Product Marketing at Voltage

Regardless of whether the year 2012 will end the way the Mayans had predicted, retailers are moving forward with initiatives that can continue to grow their business. The general mood of the retailers at the National Retail Federation’s Big Show in New York earlier this month was a few rungs above cautious optimism. In addition to investing in ways to expand sales channels and understanding customer needs to increase revenues, corporations were also looking to build social stewardship into their businesses.

The buzz on the EXPO show floor was clearly about new devices that allow acceptance of mobile sales and payments, and the technologies that facilitate the management of store displays, supplies and analytics.

While the shiny new toys were eye-catching and inspiring, other aspects that are just as crucial to the success of a retail business were conspicuously missing from the conversation. I found it interesting that the security of customer data such as personal information, purchase history and preferences, and even payment data are not yet top of mind. There were a handful of vendors showing secure point-of-sale devices at the EXPO, but the coverage from the session presentations on this topic was thin.

Perhaps data security has been relegated to the “basic requirement of doing business” category and has become a non-topic. According to Visa, over 90% of both Level 1 and Level 2 merchants are PCI-DSS compliant. However, we continue to hear reports of data breaches, including the recent one from Zappos, which, incidentally, was a finalist for the ARIL Customer Service Award at the conference. (The breach notification went out to customers the day before the award luncheon.)

This goes to show that hackers never rest, and, therefore, as an industry we shouldn’t either. As we continue to invest in growing our businesses, it’s always good practice to take a moment to assess the integrity and security of what you have in place first. Making security a forefront topic in your business’ management can mean staying a step ahead of hackers– and this is where you should always strive to be.

For more information about Voltage Security visit www.voltage.com or follow them on Twitter at www.twitter.com/voltagesecurity.

By Beth McGarrity

The past few weeks have been a whirlwind of activity as we prepared for one of the biggest retail shows of the year.  More than 24,000 retailers, technology providers, suppliers and partners gathered for the retail industry’s premier event, NRF 2012.   For any professional in the retail sector, the “Big Show” is the go-to affair for networking, business development, educational opportunities and much, much more.

What is most exciting about an event like NRF 2012 is seeing, first-hand, key innovations and learning about the future of the industry.  As I walked the show floor, networked with colleagues and attended breakout sessions, several major themes resonated that will clearly shape the years ahead:

  • Developing More Customer-Centric Approaches: In today’s competitive marketplace, retailers need to better engage with customers, build stronger relationships and influence them through targeted and highly personalized communications and promotions – clearly tying back to the multi-channel theme.

  • Don’t Forget “The Brand:” In a philosophical reversal of the multi-channel approach, some thought-leaders played up the importance of brand, especially when consumers are faced with many choices and channels.  As CNBC pointed out: “Shoppers don’t think about shopping a ‘channel.’ They think about shopping, and if you’re lucky they think about shopping a specific brand.”

  • Big Data Goes Big Time: Retailers will step up their data gathering and mining processes to unleash the science behind truly influencing consumers.  This means that vast amounts of customer data, whether it is personal information, credit card data or purchasing patterns, will be collected, managed, sifted and acted upon.  While this data will certainly be used to develop more targeted marketing programs, it underscores the need for the most sophisticated data security solutions.

  • Customer Are Willing to Share: Along the lines of “big data,” many retailers are seeing that customers are actually willing to share more personal information these days. This will create the perfect storm of copious amounts of new data mining techniques and the use of algorithms for fully understanding how consumers interact with brands.

  • Going Mobile: While this one is clearly not a surprise, the development of next-generation mobile apps, and the payment security challenges that come with this new horizon, was top of mind at the event.  Convenience and efficiencies will certainly abound when retailers arm their sales associates with iPads and other mobile payment gadgets for instant credit card processing from any location within their stores.

  • Zappos Breach: The Zappos breach news certainly made waves at the event and reinforced the hard reality that data breaches can happen to any retailer.   Fortunately, customer credit card numbers were not compromised because they were stored on a separate server.   And, as our SecurityCents readers know we always urge merchants to securely store all necessary payment data in a server outside of their network.

  • Columbia Sportswear: Along the lines of payment security, we were very excited to announce that Merchant Link, along with our partners Equinox Payments and Voltage Security, has implemented a cutting-edge, reliable, cloud-based solution to protect sensitive payment data.  And, retail giant Columbia Sportswear served as pilot implementation partner – implementing this solution across its nationwide retail network.

  • Protect All Points: In support of the Columbia Sportswear announcement, we also developed a unique microsite called “Protect All Points,” which highlights all the key points about this implementation.

Finally, be sure to check out the sessions from the event streamed here.  It’s almost as good as being there in person.  And, NRF has a highly active blog, so be sure to check out posts like this one that highlights digital retail trends.

The “Big Show” certainly delivered and clearly there will be many exciting times ahead for the retail industry.  See you all back at the Javitz Center next year!

We’ve all heard of flash mobs, or groups of people that meet in a particular place and do something fun, creative or unique, such as break out in dance or song. These flash mobs are an interesting phenomenon that have even broken into the mainstream, being parodied in advertisements and featured in TV shows.

But have you heard of flash attacks? They’re not nearly as innocuous and fun as flash mobs, and they can directly result in loss of money and damage to retailers’ brand reputation.

Flash attacks are what Gartner analyst, Avivah Litan, calls credit card skimming schemes, something we’ve discussed previously on the blog.  Essentially, credit card skimming involves individuals either tampering with, or otherwise replacing, credit card readers on point-of-sale (POS) devices within retail establishments. These tampered or replaced devices then compromise the credit card data of the cards that pass through them.

As described by Avivah in her latest blog post, these credit card skimming schemes, or flash attacks, are extremely sophisticated. More than simple acts of vandalism by random data thieves, these are highly-targeted, well-planned attacks by organized groups.

So how do these criminal operations work? Group ringleaders hire individuals to install skimmers into the POS devices or replace the equipment. From there, counterfeiters take the data and create cards, complete with pin numbers taped right on.

More individuals are recruited to then hit up ATM machines and other retail establishments where they can get cash or products that are easily resold (electronics, etc.). The attacks occur quickly and can take place in the country where the theft occurred or in other countries. The individuals withdrawing money or making purchases are instructed to pace themselves and otherwise avoid fraud detection systems.

Avivah’s blog post is an eye-opener and really highlights just how dubious and organized the people running these credit card skimming scams truly are. It’s frightening just how calculated, educated and efficient these attacks can be.

With the National Retail Federation (NRF) annual convention coming up next month, data theft and security issues facing retailers and merchants will be taking center stage. It’s important that retailers educate themselves about the attacks that are occurring, and familiarize themselves with the technologies and solutions available to help eliminate their risk. As the cost of a data breach continues to rise, no retailer can afford to be caught by surprise.

The cost of a data breach for retailers and merchants is rising every day, both in terms of dollars and brand reputation, taking into account costs for internal investigation, notification/crisis management and response. And soon, there may be another cost being levied on merchants from a different source: the government.

According to a recent article in the Financial Times, the European Union is considering a stiff fine for retailers if they fail to secure sensitive customer data. The size of the fine amounts to more than just a simple slap on the wrist. In fact, retailers breaching European Union privacy rules could be on the hook to pay a fine up to 5 percent of their annual revenue.

Although these rules are still in their infancy and, if passed, wouldn’t go into effect for as long as two years, they should still be a frightening proposition for all retailers. And it’s not just European retailers that should be concerned since the rules are expected to also apply to European subsidiaries of foreign companies.  It could also be an indicator of what may happen in the U.S.

If you think the rules may go without being enforced, you should think again. StorefrontBacktalk’s Evan Schuman wrote about this issue in a recent column, and speculated that the EU is likely to strictly enforce this legislation since they’re starved for cash and these fines could be a good way to raise money. Also, unlike credit card companies and other stakeholders that threaten to punish retailers, the government doesn’t necessarily have anything to lose from fining a retailer.

For example, Visa would probably think twice about punishing or terminating its relationship with Wal-Mart simply because the retail giant wasn’t on the cutting edge of data security. The loss of revenue from credit card transaction fees would simply be too great.

Although these rules could be years in the making, or never even see the light of day, they’re evidence that governments are starting to crack down on companies that aren’t making data security a priority. With 2011 being a banner year for cyber attacks and data theft, and the potential for the cost of a breach to continue to increase, the time is now for retailers to take a more serious look at their security posture.

With tokenization and encryption solutions available to retailers via the cloud, there is no reason why any company should not be PCI compliant and protected from data breaches. The costs are too high, both to the company’s coffers and its reputation.

Don’t let your company wait until it has to part with 5 percent of its annual revenue before you start to reevaluate how you store and protect payment card data.

By Michael Ryan

As the world’s largest retail trade association, National Retail Federation (NRF) is not afraid to hunt big game.  In late November, NRF and other industry leaders took a stand and sued the Federal Reserve Board over their alleged failure to comply with the Durbin amendment requirements. Specifically, the suits alleges that the Fed did not act in accordance with the law setting debt card interchange higher than the “reasonable and proportional” mandate in the amendment and by not providing sufficient network flexibility for merchants.

I’m not a lawyer, judge or jury, so I won’t attempt to debate whether or not they complied with the law. In fact, I support the NRF’s attempts to lower processing fees in general but as I have mentioned before the execution has led to all sorts of unintended consequences. Price fixing will always produce unintended results and even negatively affect some segments of the population it intends to help.

Case in point: Convenience stores, vending machine businesses and other merchants with a small average ticket.  The intent of the Durbin amendment was to lower rates for all but in the end it actually raised rates for these groups. USA Technologies, a provider of card solutions for the vending industry, was affected and it was announced a few weeks ago that they struck a deal with Visa to normalize their rates post-Durbin.  While not every merchant has the size and power to secure a deal like this one on their own, I applaud their efforts to use negotiation instead of litigation.

And this is nothing new.  For over 30 years, the card associations have worked with large merchants and industry groups to negotiate and adjust interchange rates to meet the market’s needs. We’ve seen this in the grocery, convenience and small ticket markets, each of which managed to persuade the associations to create industry-specific interchange categories and lower their rates. While those efforts may not have reduced the issuers’ margins to zero, they have been effective. Yet, the government mandate negates all previous negotiation by applying a one-size-fits-all method, wiping away any past progress made by small ticket merchants and other groups.

That brings us to network exclusivity the second major allegation in the suit. This is where the law can help level the playing field by introducing real competition. The associations wield a lot of power when it comes to signature debit.  Had the Fed required multiple PIN and signature network affiliations on each card, as was discussed early in the negotiations; merchants might have really gained some negotiating power. That almost certainly would allow them to affect price adjustments more naturally through competition rather than price fixing.

Who knows what will come out of the lawsuit but let’s hope it gets us closer to natural market competition than the first attempt has.

By Michael Ryan

A little over one year ago, I authored a blog post in response to a new trend that was impacting retailers: skimming of credit card information in-flight directly from payment terminals in retail locations. It was around this time last year that Aldi, a discount grocer which operates 1,100 stores in 31 states, announced that terminals in 11 stores had been tampered with and were funneling credit card and PIN data to cyber criminals.

Despite the situation at Aldi, raising awareness of this problem, it’s still an issue for retailers one year later.

According to a recent article, Save Mart, a chain of grocery stores based out of Modesto, Ca., issued a consumer advisory warning customers that 20 of its locations were found to have card readers that were compromised. It wasn’t clear whether the devices were replaced or simply tampered with. Regardless, there was the potential for sensitive customer information to be stolen.

In today’s retail environment, where getting customers in and out of the store quickly with their purchases is paramount, many retail chains have installed self-checkout counters. It was the credit readers at the self-checkout counters that Save Mart had compromised, which raises red flags for other retailers utilizing similar technology.

With data thieves getting increasing bold and physically altering credit card readers, it’s becoming increasing important that retailers remain vigilant and alert. This is especially true right now during the busy holiday shopping season.

As we discussed in a recent post, retailers that have even suspected that data thieves have compromised sensitive financial information about customers have seen a significant impact on their wallets. From public relations campaigns to clear up negative press, to credit monitoring services for customers, companies are seeing the price tag of a data breach continue to increase.

Despite high profile breaches like the ones at Aldi and Michaels, POS systems and card readers at retail locations remain a significant security vulnerability for retail chains. With the cost of a breach skyrocketing and the sheer masses of holiday shoppers flooding retail outlets, now is the time to ensure that businesses do everything they can to protect themselves and their customers.