kengr

When you use a credit or debit card, the merchasnt doesn't contasct your bank or credit card company directly.

The transaction goes to a clearinghouse, which processes it. Then it gets bundled with lots of other transactions and sent on. Often as a spool of magnetic tape or the like.

"Third party" means that they are neither the merchant nopr the banl/credity coard company.

Thing is, these clearinghouses get a cut of the transaction, as does the bank or credit card company. So merchants have an incentive to find the cheapest one they can.

So the wages at the clearinghouses are low. And the employees aren't all that well screened...

Then again, there are a *lot* of security holes in this sort of business. Customer service numbers for a lot of businesses used to (and still may, for all I know) be staffed by prison inmates!!!!

I wish I was making that up... But it was cheap labor. And they tried to have some safeguards (like nothing to write on, so the inmatyes couldn't write down credit card numbers and the like).

Check the back issues at http://catless.ncl.ac.uk/risks for all sorts of studity that will have you distrusting businesses.