Credit card processors' new approach to preventing data theft

Posted by Caitlin on May 28th, 2009

When credit card processors fail to adequately protect customer data, data breaches and identity theft occur. This fall, they'll be trying out a new strategy for protecting that data. Since processors are finding it impossible to thwart each and every hacker, they'll encrypt the data in such tiny segments that stealing it will no longer be cost-effective for criminals. Heartland Payment Systems, which recently announced a major data breach, will be introducing the new data storage system in October, with the hope that identity thieves will be deterred by the lack of easy profit.

This week, Consumerist posted an interesting interview with Evan Schuman, the editor and publisher of the blog StorefrontBacktalk.com, which sheds some light on the strengths and weaknesses of this new technique. The interview also makes it clear that while Heartland's strategy may be somewhat effective, only a significant investment in encryption technology by the credit card providers themselves will truly make our credit card transactions safe from identity thieves. And unfortunately, the credit card providers don't seem particularly eager to spend the money that would require.

In the meantime, the best way to stop hackers who attempt to steal your credit card data and open new credit accounts in your name is to make your own investment in identity theft protection or credit monitoring.