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9,000 Chinese Credit Card Accounts Could Be at Risk

Visa and MasterCard have admitted that 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.

A statement released by Visa yesterday said that 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, USA.

The security breach resulted in hackers having access to nearly 40 million credit card accounts. The breach was reported last Friday by MasterCard in the United States.

Of the accounts hacked into, about 22 million were Visa, 13.9 million MasterCard, and the rest 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 risks 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 might be vulnerable to potential risks are those who used their cards in the United States between August 1, 2004 and May 27, 2005, according to the Peony Card Center of Industrial and Commercial Bank of China (ICBC), the nation's largest lender.

Li Lei, executive vice-president of the Peony Card Center, told reporters yesterday that near 500 of ICBC's credit card accounts were affected by the breach. The center has set up a special team to deal with the incident and is in the process of replacing cards. Those affected do not have to pay charges run up fraudulently 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.

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 its budding stage. 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 launched aggressive marketing campaigns in a bid to penetrate 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 service providers that supply 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.

(China Daily June 23, 2005)

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