Customers feel the need to take security into their own hands

With the holiday season kicking off with Black Friday, many people are gearing up to spend big on gifts for friends, family members, co-workers and other loved ones. According to one report conducted by the National Retail Federation, expenditures per person for Christmas, Kwanzaa, Hanukkah and other end-of-the-year holidays are expected to crest the $804 mark, up nearly 5 percent compared to the same time last year.

While customers may be wrapped up in the spirit of giving, cybercriminals and fraudsters see an opportunity to gain access to holiday shoppers’ sensitive information. Businesses of all shapes and sizes will be seeing a huge influx of transactions and shoppers, which makes now the opportune time for criminals to strike. That is exactly what happened last year, when Target uncovered a massive breach that left millions of shoppers’ personal information and payment card numbers exposed.

The breach rocked the payments and retail industries, and has since led to many merchants making plans to deploy point-of-sale systems that make use of better encryption technology. However, replacing and implementing POS systems takes time, and not all retailers were as committed to the endeavor. This has led to a rash of data breaches affecting numerous high-profile brands across the hospitality and retail sectors.

Consumers get proactive about data protection
Although data encryption and security have become important selling points of POS systems to many merchants, many customers are not impressed by retailers’ efforts so far. This has led to many shoppers striving to take the protection of their information into their own hands.

A recent survey conducted by FICO, a leading predictive analytics and decision management software company, polled shoppers in the United States, Canada and the United Kingdom and discovered that fraud is top-of-mind for many consumers. They are growing increasingly aware of fraud in the wake of the numerous high-profile breaches and want to take action to prevent themselves from being affected by attacks.

Some respondents expressed interest in enrolling in real-time alerts that would notify them when their cards were being used to make purchases. Others preferred mobile apps that would allow them to control the types of transactions for which their cards were used (for example, online only or in-store purchases). Other customers yet may take more aggressive action, such as not using their credit or debit cards for retail transactions or opting to use pre-paid cards to minimize any long-term damage that fraudsters could incur on them.

“The steady drumbeat of news about massive security breakdowns has eroded public confidence in institutional data security,” said Anant Nambiar, FICO’s general manager for fraud and protection, who presented on consumer fraud controls today at FICO World 2014, with FICO’s vice president for Consumer Product Management, Colin McKee. “Consumers around the world clearly have an appetite for stronger payment card security, and they are eager to work with their card issuers to protect themselves.”

Regaining consumers’ confidence
For merchants and other players in the payments industry, the public’s reaction to reported security breaches should go to show that security matters in the minds of many. They may change how they pay for goods and could even avoid shopping with specific retailers in the future if they feel their data could be at risk.

The payments industry must continue to improve upon security features for merchants/consumers. As the saying goes, out of sight, out of mind, and if the payments sector can keep breach horror stories out of the news, both retailers and POS providers will benefit in the long run.