2016 • No. 16–01
By Claire Greene and Joanna Stavins

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Security of payments has long been identified as an important aspect of the consumer payment experience and is receiving renewed attention in the wake of highly publicized cybercrimes. On January 26, 2015, following an intensive, 18-month research effort, the Federal Reserve released a plan entitled, “Strategies for Improving the U.S. Payment System,” identifying security improvements as one of its top initiatives. On December 19, 2013, Target Corporation announced that hackers may have gained access to payment card data for 40 million credit and debit card accounts used in its stores in the 19 days between November 27 and December 15, 2013. The breach was widely reported, beginning on the evening of December 18. The announcement of the Target breach in late 2013 provides an opportunity to test whether news about payment security breaches changes the way consumers evaluate and use payment instruments.