In late March, a payments processor called Global Payments experienced an enormous security breach, and 1.5 million credit and debit cards from Visa and MasterCard were compromised in the process. As a consumer, you might find this at least a little bewildering. Your bank's name is on the card. Visa or MasterCard's logo is on it. Who, exactly, is Global Payments, and why did they get to build the sloppy security protocols that led to your data being compromised?
It's not a bad question. You enter into a cardholder's agreement with Visa or MasterCard, mediated by your bank. The company processing your payments is determined by where you choose to swipe your card. Merchants sign up with payments processors -- you don't.
So your financial information's security is in the hands of corporations that you don't know the first thing about. Global Payments accounts for a small minority of the payments-processing space, but it compromised more than a million accounts. Doesn't it make you wonder what other companies you've never heard of routinely handle your sensitive financial information?
What do you even know about these companies? Do you want them to handle your info? And do you have any choice? The short answer to the second question is no -- short of hopping off the grid entirely. And you don't want that. What would come of that Klout score you've been working so hard to improve?
1. First Data
Because payments processors are so top-of-mind lately, it would only be right that we start with First Data, perhaps the biggest payments processor you've (maybe) never heard of. This Atlanta-based, 24,000-employee behemoth processes an estimated 60 billion transactions a year, totaling $1.4 trillion in volume. It operates in 34 countries.
Perhaps you've noticed the Star Network logo at your supermarket's checkout aisle and didn't know what it meant. That's First Data's debit payments processing network. This is First Data's only real hint to the public that it exists. Indeed, it isn't even publicly traded despite being so large. KKR, the private equity giant, bought the payments processor in a leveraged buyout in 2007.
Were First Data to experience a security breach on par with what Global Payments did, it would likely be even more damaging to the credit and debit card industry as a whole. Do what you want to keep yourself safe -- don't use your card online, never use it at Bulgarian restaurants, whatever -- but swiping your card at any business puts your information into its system. And those systems can be compromised, as we see again and again.
2. FiServ
Just what FiServ does to make money isn't immediately apparent, but whatever it does, it does it well: It has 20,000 employees and 16,000 clients. The Wisconsin-based company has been in business since 1984, and brought in $4.3 billion in revenue in 2011. FiServ says it "helps (its) clients solve complex business challenges."
What that translates to is payments processing, like First Data, and core banking -- helping banks manage account transactions across multiple platforms. FiServ moved $1 trillion around last year alone -- that's roughly 1/15th of the U.S. gross domestic product. It processed more than 4 billion mobile deposits last year. It's huge and it's everywhere: Last year, it won an award for its core banking solutions in China, from The Asian Banker.
It's the biggest FinTech company out there, and you probably interact with it hundreds of times a year. You just don't know it, and FiServ doesn't stand to gain anything from you knowing more about what it does. What does FiServ do? FiServ provides solutions. What sort of solutions? Business solutions -- don't worry about it.
This question-begging logic extends even to its address, which has a (presumably intentional) internal rhyme scheme -- 225 Fiserv Drive.
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