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RETAILERS SCRAMBLE TO AVOID BECOMING THE NEXT TARGET: The latest fallout from Target's data breach underscores how high the stakes are in payments security for big retail. Gregg Steinhafel, a nearly 35-year-veteran of Target, resigned yesterday in the wake of the late 2013 data breach that compromised the credit card and personal information of tens of millions of Target customers. CIO Beth Jacob also resigned earlier this year, but this is the first CEO resignation to follow a major data breach. "The Target CEO getting let go was kind of unprecedented," says David Kennedy, CEO of TrustedSec, a security consulting firm that works with national retailers. "It's started to jolt folks."
Payments security, once a second-tier issue, has become a top priority in retail executive suites and boardrooms. "Since the breach there's been a huge uptick in companies trying to gather risk assessments," says TrustedSec's Kennedy. "It's a new era for boards to take a proactive role in understanding what the risks are," security expert Cynthia Larose was quoted as saying in the Associated Press. Steinhafel had reportedly been meeting monthly with the Target board following the breach, rather than quarterly, as was customary.
See a copy of Gregg Steinhafel's resignation letter here.
REPORT - ISSUERS TO BEAR THE BRUNT OF EMV TRANSITION COSTS: A new report from Javelin Strategy and Research, scheduled for release later today, estimates that credit card-issuing banks will bear a hefty 62% of the total hardware cost (cards and point-of-sale terminals) for the U.S. migration to EMV, the chip card security standard common in Europe and Asia. Merchants will bear 38% of the cost, which the report author Nick Holland pegs at $6.8 billion.
Whoever ends up paying, the migration may be a windfall for point-of-sale hardware and software makers. Our own report, which also includes the cost of POS software updates, pegs the POS conversion cost at $7 billion, annualized in the chart below. In the wake of the Target breach, major retailers will almost certainly take the lead in the conversion. Target last week announced that it would accelerate a plan to convert all branded store cards and payment terminals in its 1,797 U.S. stores to EMV, at a cost of at least $100 million.
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MASTERCARD TOUTS MOBILE POINT-OF-SALE GROWTH, LED BY EMV: A new report from MasterCard shows a sharp uptick in the number of mobile point-of-sale systems registered with the payment network. The number has grown from just six in September 2012 to 72 in March 2014. These systems typically either accept payments remotely through custom-built mobile terminals, or use a combination of attachable card readers and software to transform tablets and smartphones into mobile registers.
EMV, the new credit card security standard, is already accepted on a majority of systems. Of the 72 different mobile card readers built to accept MasterCard, 46 were geared for EMV, with chip-and-PIN readers leading chip-only 2-to-1.
BITCOIN GETS VENTURE CAPITAL BUMP WITH NEW $30M FUND: Australian venture capital fund Future Capital yesterday announced a new $30 million fund devoted to "companies that are leveraging services based on Bitcoin and other crypto-currencies." Dominic Carosa will lead the fund, which is actively soliciting investors and start-ups online. The new fund sits at the nexus of two trends: a rising tide of payments industry venture funding, which hit a new high last quarter, and increasing interest in the business cases for Bitcoin - which got an official blessing of sorts last week when quotes on the digital currency's price began appearing on Bloomberg data terminals. In the U.S., prominent venture capitalists like Union Square Ventures' Fred Wilson and a16z's Marc Andreessen have invested in Bitcoin, and have been outspoken in describing its potential. Andreessen has told the Wall Street Journal he planned to invest "hundreds of millions" more dollars in Bitcoin products.
AMAZON ADDS CIRCUITOUS CART-ADDS ON TWITTER: Amazon is asking its customers to use the hashtag #AmazonCart on Twitter so that products mentioned in tweets will be added to that person's shopping cart, according to Pando. To participate, shoppers must first connect their Twitter account to Amazon. Then they can reply with #AmazonCart to tweets containing an Amazon product link. This seems like an awful lot of steps just to add an item to a shopping cart - and shoppers will still have to go to Amazon.com to make a purchase. Past efforts at a similar Tweet-to-purchase feature, like one by Amex, have not seen wide adoption. The one case where it might be helpful to use #AmazonCart is when a shopper sees a product mentioned on Twitter and wants to make a spontaneous purchase. But even then, most people will probably want to see photos of the product and do some research before making a purchase.
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Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.