The tensions and problems surrounding the security of electronic customer data and online transactions got a proper airing last week, when Visa held a security summit in Washington, D.C. It seems everyone had some advice for others in the transaction chain.

Visa USA president and CEO John Philip Coghlan wasn't cutting retailers any slack for data breaches. "The majority of compromises come from storage of prohibited data and retailers using vulnerable systems to process data," Coghlan said. Just one-third of the largest merchants--those processing more than 6 million transactions a year--comply with payment card security standards. Visa this year will offer incentives for compliance, such as giving its lowest fees to those that are compliant before October, plus it will levy fines for noncompliance.

We're in a security arms race, eBay CEO Meg Whitman says Photo by Carol Powers/Bloomberg News/Landov

But retailers would like more help from Visa, too. Department store Nordstrom in 2005 increased its security efforts as Visa began emphasizing compliance. But Nordstrom executive VP Daniel Little would like the card companies to offer better guidance on how companies should rank data risks. "That would help us identify the highest-priority issues," he said. Little and his team conduct weekly meetings related to payment-card compliance, and he provides quarterly reports to the company's board. "Information security and privacy are in the top five of our risks," he said.

For eBay CEO Meg Whitman, scams are one of the biggest business risks because of the potential loss of trust. She outlined some of eBay's new security tools and strategies. "Security on the Net is actually an arms race in its most classic form," she told the summit.

EBay and its PayPal group are the favored target for phishers. To ensure that customers can identify legitimate eBay E-mails, the company includes a digital signature on every one it sends. It's trying to convince Internet service providers to route only E-mails that contain this signature. Another measure is a PayPal security key that creates a random code to authenticate each transaction. "It's a combination lock for your PayPal account," Whitman said. It's been in beta for about a month.

Whitman also thinks banks and card companies could do better. She noted bank card networks receive information about fraudulent transactions days and sometimes weeks before merchants do, and that's a major problem. EBay wants to know about fraudulent payment accounts before its users ship goods to the perpetrators.