Visa, MasterCard Say They’re Serious About Security
Late last year Target (NYSE:TGT) was the victim of a cyberattack, and as a result, the security of millions of customer accounts was jeopardized. This was obviously a setback for Target, as consumers were concerned that they couldn’t safely pay for purchases there with their credit or debit cards. But the attack was in many ways a greater blow to credit card providers Visa (NYSE:V) and Mastercard (NYSE:MA).
You wouldn’t know it looking at these companies’ share prices. While they are off their all-time highs by a few points, Visa and Mastercard shares have continued to work. Nevertheless, if we take a step back from the particular incident, we realize that credit card users in general are at risk, and this means that these two point-of-sale transaction companies are at risk, as well. There are two reasons for this.
First, some consumers be concerned that the wrong people can get their hands on their credit card data, leading them to avoid electronic payments when possible. Seeing that Visa and Mastercard make their money by collecting a small fee each time their cards are used, this would be a direct hit to their top and bottom lines. Second, Visa and Mastercard could be held liable for losses incurred by their card users in the event of fraud.