Some 9,000 Chinese accounts put at risk
By Zhao Renfeng (China Daily)
Updated: 2005-06-23 00:29

Nearly 9,000 Chinese credit card holders' accounts have been exposed to potential fraud because of a security breach at a US-based card data processing company last week, Visa and MasterCard have admitted.

A man stands before a MasterCard poster during a promotion activity in Nanjing on February 14, 2004. [newsphoto/file]

A statement released by Visa said yesterday about 3,100 Chinese Visa cardholders are at risk, while MasterCard announced that up to 5,560 of its cardholders in China could be affected by the security breach at CardSystems in Tucson, Arizona.

The security breach, in which hackers had access to 40 million credit card accounts, was first reported last Friday by MasterCard in the United States.

About 22 million were Visa accounts, 13.9 million MasterCard, and the rest were American Express and Discover accounts. The head of CardSystems has acknowledged his firm should not even have been keeping the consumer records in the first place.

Both Visa and MasterCard have pledged to limit the risk to cardholders as much as possible. The companies said they have not yet identified any definite instances of fraudulent transactions relating to Chinese mainland cardholders.

American Express also said it was not aware of any fraudulent activity related to the incident, but did not give the number of mainland cardholders affected.

Chinese cardholders who may be vulnerable to potential risks are those who used credit cards in the United States between August 1, 2004 and May 27, 2005, according to the Peony Card Centre of Industrial and Commercial Bank of China (ICBC), the nation's largest lender.

Li Lei, executive vice-president of the Peony Card Centre, told reporters yesterday that less than 500 of ICBC's credit card accounts were affected by the breach. The centre has set up a special team to deal with the incident and is in the process of replacing cards compromised by the hackers. Account holders will not have to pay fraudulent charges run up on their cards.

The People's Bank of China, the central bank, yesterday also expressed "grave concern" at the incident. It asked Visa and Mastercard to "properly handle" problems resulting from the security breach that concern Chinese cardholders.

International card organizations stressed that exposed data may not necessarily lead to credit card fraud, but Visa and MasterCard said they are teaming up with issuing banks in China to replace all the affected cards to ease security concerns.

"The Chinese credit card market is still in a budding period. We have to try our best to restore confidence in the market," said Zhang Yumu, Visa's spokesperson in China.

Visa, MasterCard and American Express have all been launching aggressive forays into China's emerging credit card market.

CardSystems processes more than US$15 billion in payments for small- to mid-sized merchants and financial institutions in the United States. It is one of hundreds of processors that provide terminals to merchants and help banks process millions of transactions a day, electronically relaying cardholders' names, account numbers and security codes so that once a card is swiped, the sale will be authorized, the merchant paid and the customer billed.

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