First Data and NRF Release Small Biz Data Security Study Results

by Mercator Advisory Group 0

In a survey of 651 small and mid-sized merchants, First Data and the National Retail Federation have determined that 86% of respondents care about securing customer information and think that data security is important to their businesses, but only 36% think they are vulnerable to a breach of payment card data. Three-fifths are also unaware of breach-related costs and less than half have completed a SAQ.

While two-thirds (66%) of respondents to the survey claimed awareness of the Payment Card Industry Data Security Standard (PCI DSS), only 49% of respondents had completed a self-assessment at the time of the survey. Among those who had heard of PCI DSS; however, 42% did not know that merchants are obligated to conduct the self-assessment annually and 41% had not heard of the recent change in regulations.

The survey also showed there appears to be some confusion among retailers regarding the liability costs in the event of a data security breach. More than 60% of these smaller merchants did not realize that credit card companies are authorized to fine their business a per-card fee for every card that has to be canceled if it is determined that they are the source of a data breach.

Restricting physical access to cardholder data and using anti-virus software were the two most frequently reported protection methods (76%). Other practices toward the top of the list were restricting access to cardholder data by business need to know (67%); developing and maintaining secure systems and applications (64%); and maintaining a policy that addresses information security (63%). Of those who electronically-store cardholder data, 68% also take steps to protect that data and 53% use encryption technology.

More than 4% of respondents reported having been a victim of any one type of fraud listed in the survey. Although the percentage appears low, it equates to a potential one million small businesses being impacted. The latest Federal data estimates there are approximately 24.6 million small businesses currently operating in the United States.

Physical theft or tampering with terminals and computer viruses, including malware, were the top two fraud and security incidents experienced by respondents at 37% and 22%, respectively. Employee misuse or theft of card data accounted for another 17% of incidents.

“Our survey results illustrate that smaller retailers take protection of their customers’ sensitive payment card data very seriously and continue to add more layers of security to their business operations,” said Mark Herrington, senior vice president of Global Product Management and Innovation, First Data. “The finding we found most intriguing was the confusion around the potential liabilities in the event of a data breach. We’re confident that continued education in the payments industry will raise awareness of the importance of annual self-assessments and the right mix of data security and fraud prevention tools.”

Data from the Small Business Data Security Study was fielded online from Oct. 26 through Nov. 19, 2010. The majority of survey respondents (89%) represented less than $500,000 in payment card sales annually through both card-not-present (CNP) and in-person transactions.

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