Someone compromised 1% of all visa and mastercard account numbers

A 2-17-2003 very short Reuters story reports that Over 5 million Visa/MasterCard accounts hacked into

“More than five million Visa and MasterCard accounts throughout the nation were accessed after the computer system at a third party processor was hacked into, according to representatives for the card association”

This story by the BBC has more details

Great. Why were the account numbers on Internet-accessible systems. And why were the accounts not stored encrypted at the third party?

5 million accounts is about 1% of the 560 million total cards in circulation. This is huge.