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Breaches at credit card processing terminals can severely damage a business

February 27, 2014

Most retailers have already invested in extensive credit card payment processing equipment, for both their in-store and e-commerce offerings.

Most retailers have already invested in extensive credit card payment processing equipment, for both their in-store and e-commerce offerings. However, if these systems aren’t up to the latest standards, they could be susceptible to a data breach. As a recent earnings report from Target suggests, such an incident could cause huge damage to a retailer’s reputation – and, as a result, to their revenue.

Target’s fourth quarter earnings report details the damage the company incurred as a result of fault payment processing terminals. Target saw its data breached illegally during the fourth quarter of 2013, due to low-quality payment processing equipment. This put consumer’s personal data at risk, which in turn led to a decrease in goodwill felt toward the company, which then led to a stark decrease in sales. 

“During the first half of the fourth quarter, our guest-focused holiday merchandising and marketing plans drove better-than-expected sales,” explained Gregg Steinhafel, chairman, president and CEO at Target. “However, results softened meaningfully following our December announcement of a data breach. As we plan for the new fiscal year, we will continue to work tirelessly to win back the confidence of our guests and deliver irresistible merchandise and offers, and we are encouraged that sales trends have improved in recent weeks.”

According to the earnings report, the company’s sales decreased by 2.5 percent during the fourth quarter. This comes as many other retailers saw their sales increase significantly – illustrating why protecting credit card payment processing equipment from outside breaches is one of the most important priorities for any retail outlet to focus on.

Web sales at other retailers continue to surge forward
Strong online credit card payment processing standards, however, can have a effect as strong as the data breach’s effect on Target was negative. Best Buy, for example, recently reported that its online sales increased by more than 25 percent year-over-year during the same timeframe. In the fourth quarter of 2013, the company’s web sales represented $14.47 billion in revenue as well as more than ten percent of all sales made by the retailer. The Internet Retailer report concluded by noting that overall revenue at Best Buy was still down during the quarter – showing how a strong online presence can help to offset shortcomings in other avenues. 

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