December 14,2006
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Visa and MasterCard Take Steps to Stop Fraud
Visa and MasterCard, arguably the two largest credit card network operators (certainly in America, if not the world) have started taking a major pre-emptive step against fraud. Lately, they have been fining merchants who are "noncompliant" with their security guidelines. MasterCard has been reprimanding merchants in such a way for a little over a year, but the fines have recently become larger, and it appears MasterCard is stepping up its enforcement. Visa is focusing on fining its biggest offenders – both in volume, and in instances of noncompliance. Apparently, 334 of Visa's merchants make up nearly 50% of all annual Visa transactions – and 20 of them are routine offenders, whom Visa is threatening with fines.
The fines reportedly range from $5,000 to $15,000, and represent much more than a slap on the wrist for merchants. When Visa/MasterCard participating merchants play fast and loose with consumers' card numbers, employee security, and access to personal information, they open innocent cardholders up to identity and/or credit theft. Starting in the new year, Visa reports that it plans to turn its focus to smaller merchants, as well. While big, high-grossing merchants may simply be lax about their standards, smaller merchants may have issues of technology to deal with, as well. Small business owners especially may not be hip to the newest ways in which their systems could be compromised, and may not have/want to spend the funds needed to upgrade dated equipment.