Why Global Payments Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of payment processing company Global Payments (NYS: GPN) got clobbered through the first part of today's trading, losing as much as 14% before trading was halted.

So what: It appears at this point that Global Payments is the processor at the center of what could be a massive credit card security breach. While TheWall Street Journal put the number of compromised cardholders at 50,000, the security blog Krebs on Security suggested that the breach could involve many millions of card numbers.

The breach runs across card brands including the two giants of the industry, Visa (NYS: V) and Mastercard (NYS: MA) . Both companies were quick to provide assurances that their networks had not been breached.

Now what: The potential fallout for Global Payments -- if it is indeed the processor involved here -- could be painful for the company and its investors. However, details around the nature of the breach, its true size, and whether it is Global Payments that's responsible are slim right now.

Even for those that aren't shareholders of the companies above, the story here is significant because the vast majority of us own credit cards. The lack of details and the halted stock may make it tough for Global Payments' shareholders to react here. Obviously, cardholders should keep a close eye on their accounts to make sure there isn't any suspicious activity.

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At the time this article was published The Motley Fool owns shares of Mastercard. Motley Fool newsletter services have recommended buying shares of Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

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