How Retailers Are Preventing Card Breaches

While retailers of all types must be diligent in preventing debit and credit card fraud, many small to medium-sized merchants will likely not face the same type of breach as Target (NYSE: TGT) experienced in the December heist of 40 million shoppers' credit and debit card data. Large international retailers such as Target and Walmart (NYSE: WMT) keep consumers' credit and debit card history in their systems in order to facilitate speedy checkouts. However, many smaller retailers keep limited to no data associated with their customers' credit and debit cards electronically. Therefore, there is no data to steal, or not enough data to allow for a massive, Target-like breach. Independent jewelry store Le Vivre in Riverside, Calif., for example, only keeps the last four credit card digits of its customers on file. "No social security number. No driver's license. No financial information about our customers. No home address," Le Vivre Owner Mohammad Alnajafi, told The Press-Enterprise. "Every time our clients charge something they have to give us that information all over again. That way, we don't keep anything that could lead to harming them. I have to be sure I don't take any extra information during the transaction," he added. Another tactic by small retailers is not keeping any computerized information on its customers or their payment methods – which is going a bit too far. Up-to-date customer databases are necessary in the modern world of commerce and e-commerce. However, the technology-free method is working for retailers such as Cooking 101, a bistro and school in Corona, Calif. When the school's students requested automatic withdrawal for monthly membership fees, the owner refused. "I can understand how it could be much more convenient, but I told them to bring a check every month. The old-fashioned way works for me," Owner Connie Beale told The Press-Enterprise. Meanwhile, banks need to immediately implement tactics that protect retailers and their customers from card breaches. Requiring cardholders to use their pin numbers with each transaction would provide the "best security," according to an editorial in USA Today. The U.S. should also replace magnetic strip cards with a digital chip that prevents thieves from counterfeiting cards with stolen data. "That's one reason the U.S. has become a mecca for hackers," the Editorial Board of USA Today wrote. For more, see: This USA Today article This The Press-Enterprise article