by Joseph Kenny | 11/8/08

It might be a story a few months old at this point, but experts say the need is greater than ever to watch out for the dangers of credit card middle men. Ever since June saw the middle man company Card Systems Solutions Inc. putting more than 40 million consumer credit card accounts in jeopardy and their holders at risk for identity theft, those who use credit cards have been increasingly wary about just who exactly is seeing and handling their data.

The thing to understand, however, is that these middle men have been an integral part of the credit card game for years or even decades now. While the idea might seem unappealing, processing companies such as Card Systems Solutions Inc. are involved in the majority of credit card transactions, including those from high profile lenders like Visa and MasterCard. Rather than managing transactions in house (which would be a nearly impossibly large job), those companies farm out the business end of these processing jobs to the processing companies... and that's where your critical data can be put at risk.

Know the machines that you actually swipe your card through when you go to the store and make a purchase? Those aren't put there by Visa and Master Card! Rather, they're the products of these processing companies. When you scan your card, the data is actually sent to them first, before being routed to the banks that are in charge of approving or declining your attempted credit purchase. In exchange, they charge a small fee to the retailer for each transaction.

The bottom line, however, is that your data IS running some risk of exposure thanks to these companies. What can you do about it? Find out from your credit card companies which processing companies they deal with, and then check up with those companies to make sure their standards and practices are up to date. It pays to be educated.