As the world becomes increasingly digitalized, the risk of card data breaches for issuers, acquirers, and merchants continues to grow. As a result, it is essential for banks and payment facilitators to take a proactive approach to assessing and managing merchant cyber risks. This is not only to protect the financial industry but also to protect their customers from the financial and reputational damage that can result from a data breach. A reference that supports this is the “Merchant Cybersecurity Report” by the National Cyber-Forensics and Training Alliance (NCFTA), which highlights the importance of merchant cyber security to the financial industry and the need for banks and payment facilitators to take a proactive approach to managing the cyber risks of their merchants.

Let us take a brief look at the costs of data breaches and ways to avoid it.

Damage to Issuers and Acquirers

The cost of a card data breach can be staggering for all parties involved. Just as Warren Buffet preaches, “It takes 20 years to build a reputation and five minutes to ruin it.” A data breach can cause a loss of trust and customers, which can have a long-term impact on the business.

For issuers, such as banks or credit card companies, the it can be reissuing cards to affected customers, as well as any fines or penalties imposed by regulatory bodies. Additionally, there may be costs associated with providing credit monitoring or identity theft protection services to affected customers. According to the 2022 Cost of a Data Breach Report by IBM and the Ponemon Institute, the average cost per record for a card data breach is $4.35 million. 

Acquirers, such as payment processors, also bear the cost of reimbursing merchants for fraudulent transactions and any fines or penalties imposed by regulatory bodies. For merchants, such as retailers or e-commerce sites, the cost can include reimbursing customers for fraudulent transactions, as well as upgrading security systems or infrastructure to prevent future breaches. The cost to merchants can range from $36,000 to $50,000 per incident, plus additional expenses if a lawsuit is filed.

Avoiding The Cost of Data Breach

To mitigate these costs, it is essential for banks and payment facilitators to take a proactive approach to managing merchant cyber risks. This can be performing regular security assessments, implementing strong security protocols, and providing education and resources to merchants to help them protect their customers’ sensitive information. By taking these steps, banks and payment facilitators can help to protect their customers from the devastating consequences of a data breach.

Professional expertise is recommended for laser focused solutions and consultancy.

References

  1. IBM and the Ponemon Institute. (2022). “Cost of a Data Breach Report.” https://www.ibm.com/security/data-breach
  2. Experian. (2022). “Data Breach Industry Forecast.” https://www.experian.com/data-breach/2022-data-breach-industry-forecast
  3. Verizon. (2022). “Data Breach Investigations Report.” https://www.verizon.com/about/news/2020-data-breach-investigations-report
  4. National Cyber-Forensics and Training Alliance (NCFTA). “Merchant Cybersecurity Report”