We are often asked what Interchange Optimization really means and the impact it has on a company’s bottom line. The answer is complex, but at its core, Interchange Optimization is based on industry-specific program requirements that were created by the card brands (Visa, MasterCard, Discover, AMEX).
Credit Card Processing
Fighting payment fraud and cyber threats has become quite the daunting burden over the years. In 2015, the Federal Reserve formed a division called the Secure Payments Task Force and this year the group is looking for some collaboration because for this industry, it’s all hands on deck for protecting payments.
Since its birth, the Secure Payments Task Force has been “advancing efforts to support the strategy of reducing payment fraud and the safety, security and resiliency of the payments system.” They’ve largely focused these efforts on:
Business Insider recently shared a feature on the “Gap Between EMV Adoption and Usage in the US” and how we have been stacking up against other countries around the globe.
First off, let’s define exactly what EMV is and why it’s here.
Do you think twice about your credit card data not being secured when you’re out to eat?
Noodles and Company diners are now suffering the effects caused by a breach between January 31st and June 2nd of this year. Diners’ data at 400 locations have ended up in the hands of hackers causing what could be a headache for anyone who visited one of those locations. Hackers used malware to gain access to credit card data during the four-month timeframe.
As the Fintech (Financial Technology) industry grows, it has become apparent that it is no longer just a financial transaction, but a lifestyle that they must support.
Consumers and businesses expect instant results when it comes to transactions. Businesses no longer have to be tied to a computer and receipt printer at a counter, but rather can assist customers wherever they are using a mobile phone and an app to process transactions and send an instant receipt via email.
With the nearby deadline of April 15th to file taxes, there is also the looming tax scams that affect millions of Americans. IRS Commissioner, John Koskinen warns, “Don’t be fooled. The IRS won’t be calling you out of the blue asking you to verify your personal tax information or aggressively threatening you to make an immediate payment.” (IRS.gov, Consumer Alert: Scammers Change Tactics, Once Again).
The IRS warns individuals they will never:
A study by SecurityMetrics finds that over 63% of businesses aren’t encrypting the credit cards they process.
Additionally, 7% of those businesses store that unencrypted magnetic stripe data leaving that information vulnerable to hackers. Unfortunately, magnetic stripe cards are incredibly easy to replicate and are always in demand on the black market. Less than a week after the Target breach, “card shops” were completely overloaded with credit card dupes.
Instances of card-not-present (CNP) fraud will likely increase over the next two to three years with the U.S. adoption of credit and debit chip cards. This was the case in European countries, following EMV (Europay, MasterCard, and Visa) adoption.
CardConnect’s chief technology officer, Rush Taggart, sat down with Bankrate’s Rachel Hartman to discuss how tokenization works and the purpose it serves in payments. Since data breaches have continued to rise and impacted everywhere from Neiman Marcus to Target, more and more consumers are worried that their data will be stolen. Tokenization aims to make that fear a thing of the past, as Rush explained to Bankrate.
“The goal of tokenization is to make it so there’s no data to breach,” said Taggart