House of cards

The phenomenal growth in credit and debit card transactions over the last couple of years has fuelled fears that our spending patterns are filtered, mapped and stored on the databases of the world's major corporations and especially the banks.

According to the Association of Payment and Clearing Services (Apacs) there were 4.2bn debit and credit card transaction last year with a total value of ?188bn.

The number of transactions over the internet was up 50% to an estimated five million, though the value only reached ?5bn.

Banks must filter all the transactions that zip across their systems to satisfy Britain's money laundering regulations. Any unusual or large payments must be sent to the national criminal intelligence service in London.

Last year saw a 70% increase in the number of suspicious transactions sent in by banks, accountants and solicitors.

The banks, however, are not allowed by their own banking code and the Data Protection Act from mapping customer spending habits and selling services on the back of the information. If they send out literature about mortgages or unsecured loans it will only be based on the state of an individual's bank account and their overdraft or surplus savings.

Apacs says some of the US credit card companies that have entered the British market have failed to sign up to the banking code, but presumes they are working within the guidelines and UK data protection law.

So if not the banks, who is mapping our transactions?

With the growth of loyalty cards and electronic purchases, retailers have been able to build up a vivid picture of many customers.

Perri 6, political scientist at Kings College London and a former member of the Demos think tank, says the major retailers have become almost like banks but are not constrained by banking rules.

"Banks are not expected to take into account information about your behaviour, but shops are building up considerable amounts of data on their customers free from the constraints of banking rules," he says.

He wants to be re-assured that when they sell financial services they are not using their consumer data to influence the level of interest offered or cost of life insurance. "If I am collecting HIV prescriptions for a housebound friend, that information could be used to influence the outcome of my application for life insurance. It shouldn't happen, but I don't think consumers are reassured at the moment," he says.

Customers can ask for records of their transactions and Sainsbury's has been open about the fact that it records the method of payment at each visit, whether a card was swiped or keyed into the till. It says it also registers the staff number, and even which check-out was used, which it says is kept for security and in case of customer queries.

There can also be problems when finance companies refuse to forgive customers for past misdemeanours. "The Data Protection Act says data should not be held for longer than necessary, but it is held for long periods and past problems are difficult to live down," he says.

Shared loyalty schemes such as the one launched earlier this year by Sainsbury with Debenhams, Barclaycard and BP make matters worse, says Perri 6, because a missed payment or a credit hiccup is shared by all the retailers in the group.