American Express has followed Visa in dropping CardSystems Solutions as a credit card payments processor, after the data security scandal that compromised the personal data of 40 million customers. It is the biggest ever single breach of personal data security in US history, with the data on, apparently, around 200,000 customers being stolen. The FBI is investigating the theft, which could lead to customers' identities being used by the hackers to commit fraud. Visa announced it would no longer use CardSystems earlier this week and American Express has now followed their lead. Both companies say that lack confidence in the processor's security systems was the reason. MasterCard, which also uses CardSystems, has said it will give the company until August to put in place improved security systems to stop the kind of breach that took place this June. CardSystems, unsurprisingly, said it was "disappointed" by Visa's decision. It will be interesting to see how they respond to American Express's move.
What this shows very clearly is how security breaches now have significant commercial cost. In the past such breaches tended to be brushed under the corporate carpet - but new compliance rules make this increasingly less possible. And the recent spate of breaches show how hard it is for internal IS functions to adequately secure the systems, which perhaps explains the increasing popularity of Managed Security Services.
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