By Dow Jones Business News,
February 14, 2014, 06:05:00 PM EDT
After weeks of pointing fingers over a massive theft of credit-card information from Target Corp. customers, the U.S.
financial and retail industries are trying to mend fences.
Fifteen Washington, D.C., trade groups representing banks and retail stores joined a new partnership this week focused
on protecting payment data from hackers, saying they intended to work to share information about cyberthreats and
advance payment technology that is less vulnerable to attacks.
The move follows criticism from Capitol Hill about the industries' failure to work together to protect consumers and
could portend greater collaboration in the U.S., which has lagged behind other countries in adopting technology known to
reduce credit-card fraud.
But the two industries, which have previously battled over federal rules governing transaction fees, still have a
significant gulf over some key issues, including who will be held liable for the costs of a cyber breach.
The drivers of the new partnership were Sandy Kennedy, president of the Retail Industry Leaders Association, which
represents Target and other big retail chains, and former Minnesota Gov. Tim Pawlenty, who leads the Financial Services
Roundtable and represents big banks and the payment networks Visa Inc. and MasterCard Inc. Ms. Kennedy originally
pitched the idea weeks ago and the two met in Mr. Pawlenty's office Monday, agreeing to marshal support with other trade
"The financial services industry and the retailers have some things we are going to continue to disagree on," Mr.
Pawlenty said in an interview. "That shouldn't stop us from working together where we can."
A series of congressional hearings and news conferences about the Target breach in recent weeks has laid bare the
differences between the two groups. The breach involved the theft of 40 million credit- and debit-card numbers from the
James Reuter, executive vice president of Lakewood, Colo.-based FirstBank and a member of the American Bankers
Association, told the Senate Banking Committee on Feb. 3 that banks recover "pennies on the dollar" when they pay to
cover fraudulent charges or reissue cards and Congress ought to change that. The National Retail Federation blasted
banks for their failure to make transactions with stolen card numbers harder to execute, including by making consumers
enter personal identification numbers for credit-card transactions. Both the retail federation and the bankers
association are part of the new coalition, which was announced Thursday.
Sen. Mark Warner (D., Va.), who chairs a security-focused subcommittee of the banking panel, urged the groups to avoid
a repeat of the fight over the "interchange" fees associated with card transactions. "We don't need another...long-term
fight between the bankers, the retailers and the card industry," Mr. Warner said at the Feb. 3 hearing.
The new coalition will include working groups made up of experts from both industries. One early goal: Finding
consensus on a national standard for notifying customers whose data has been stolen, to replace a patchwork of state
But the lobbying battles are likely to continue. The Credit Union National Association, which estimates its members
have so far paid $30.6 million to reissue about 4.6 million credit and debit cards because of the Target breach,
declined to join the new coalition this week. It is planning to advocate for more financial liability for retailers when
it brings credit union leaders to Capitol Hill to meet with members of Congress later in February.
Patrick Keefe, vice president of communications for CUNA, said in an email that the group didn't join the coalition "
at this time" because it wanted to conduct those meetings "without any implication that some sort of understanding has
been reached between credit unions with the retailers (because it hasn't)."
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