What is the problem faced by MasterCard and the other credit card companies and banks in this case? What caused the problem? What is its impact?

What MasterCard and the companies involved had to deal with was one of the worst cases of
data theft ever. As much as 40 million credit card accounts were exposed and 200,000 were actually stolen in a hacking incident. The hacking incident took place at a payment processing company called CardSystems Solutions used by various credit card companies including MasterCard and American Express. 22 million Visa accounts, 13.9 MasterCard accounts, and a number of American Express and Discover card accounts were breached.

The incident occurred when a hacker was able to take advantage of the security vulnerabilities in the CardSystems network by placing script, a small computer program, on the network and therefore making it possible to gain access to credit card holder data. The data was not encrypted, which could have lowered the valuable of the data or even making it useless.

This incident led to Visa and American Express terminating their relationship with CardSystems and because the company no longer had these large clients, they were no longer able to function as a company and plans were later made by CyberSource Corporation to buy all the company’s assets. California consumers and retailers also files a class action lawsuit against CardSystems, Visa, and MasterCard due to violations against state law from failing to secure their networks properly and quickly notifying consumers after the incident occurred.