Security Perceptions the Biggest Threat to Cardholder Growth

George Zirkel, SVP & Head of Global Payments Strategy, Transaction Network Services

In an increasingly complex and competitive marketplace, banks are looking to cardholder growth to cement long term profitability. George Zirkel, Head of Global Payments Strategy at Transaction Network Services (TNS), provides some valuable insights into how banks can devise the strongest and most attractive offering for customers.

When addressing the issue of growing the number of cardholder accounts, banks need to go further than simply looking for cost-effective and feature heavy offerings. Consumers are motivated by these aspects and that is undoubtedly true; however, one factor in particular is rising above all others as the biggest influencer on a cardholder’s choice of bank or payment type.

I am sure it will not surprise you to learn that the high profile data breaches of recent years, combined with the sustained targeting of sensitive and valuable cardholder data by criminals, is creating security concerns that run deep for consumers.

In a recent survey commissioned by TNS, we discovered that 68 percent of US adults are concerned about the security of their credit and debit card data, while 84 percent think banks, retailers and other organizations involved in the credit/debit card industry need to do more to protect their personal card data.

Switch Financial Transactions to Private Networks

My first recommendation to banks, alternative payment providers and their customers is to move financial transactions off public networks. These are more vulnerable to security threats and may suffer recurrent reliability issues. It may have been a prudent choice years ago when card usage was in the early adoption stage, but as we reach peak usage rates and criminals become increasingly sophisticated, the weaknesses of the internet are being too readily exploited.

When addressing the issue of growing the number of cardholder accounts, banks need to go further than simply looking for cost-effective and feature heavy offerings

Instead a private network, which is dedicated to the payments industry and has been designed specifically to meet the exacting needs of this sector, can offer greater protection and peace of mind.

This year we have already seen many data breaches hit the headlines, including the biggest cyber-heist of its kind to affect a UK bank. The breach suffered by a major UK supermarket-affiliated bank saw an estimated $3,250,000 stolen from 9,000 customer accounts. Investigations are ongoing.

Prior to that, the notable breach of one of the world’s leading online retail marketplaces, affected many third party vendors as well as customers with bank deposit information compromised and non-existent merchandise advertised.

Many big household names have now realized at their cost that the internet is not as safe, reliable and fool-proof as some might believe.

A private, payments-focused network, has many other benefits too such as

• Dedicated and high speed functionality facilitates faster EMV transactions
• Cost effective, flexible and scalable options to suit requirements
• Can contribute to improving profitability
• Faster speed to market
• Provides support for better and more integrated reward programs
• Offers comprehensive coverage of industry relevant endpoints
• Delivers visibility, reporting and monitoring data
• Covered by 24/7 support
• Can potentially reduce the scope of your PCI DSS compliance

So once you have switched to a private network, is that the end of the story? No. Security protection is an ongoing challenge and the industry must be agile, moving forward with technological advances that aim to keep them one step ahead of fraudsters.

Step up Security Measures

In today’s world, criminals continually adapt and evolve. They introduce increasing levels of sophistication to their attacks whether it be using the latest malware or duping employees with elaborate ploys to divulge passwords or give access to sensitive equipment.

A key strategic way of keeping pace with this threat is to introduce additional layers of security and this is why at TNS we offer both managed encryption and tokenization solutions to enhance protection.

These solutions have been designed to help eliminate sensitive cardholder data from within the merchant environment where it is at risk of breach from both internal and external factors.

In our survey, 76 percent of US adults felt encryption would be a secure way of protecting their card data.

Harness New Technology

If we look further ahead still, banks and alternative payment providers would also be wise to consider new innovations that center on confirming identity, such as device fingerprinting and the use of telecommunication or location data to verify personal details. Some may instantly dismiss these as costly gimmicks created to satisfy technology hungry consumers, but the potential financial and reputational losses of a data breach are likely to far outweigh this investment.

In the wave of uncertainty sweeping banking, one of the most effective ways of reducing risk and attracting new cardholders is to tighten up security and move financial transactions away from public networks and onto a fit for purpose private payments-focused network. But don’t stop there in the fight against fraud as the criminals certainly won’t.