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Debit Cards Continue To Show Resilience After Turbulent Year

The 2014 Debit Issuer Study, commissioned by PULSE, found sustained growth in both consumer and business debit in 2013. Financial institutions weathered the Target data breach and are looking for solutions to enhance security, with many issuers now planning to implement EMV debit, the study shows. Debit program performance continues to improve, as active cardholders increase their usage of debit.

Key findings include:

  • Consumers continue to shift to electronic payments, with transactions per active card increasing to 20.1 per month from 19.4 a year earlier.
  • 84 percent of financial institutions reissued all exposed cards in response to Target, compared to only 29 percent that typically reissue all exposed cards as a standard response to breaches.
  • 86 percent of financial institutions stated that they plan to begin issuing EMV cards in the next two years, a significant increase from 50 percent in 2012.

“In the wake of several high-profile data breaches, the industry has come together to look for solutions to increase security and advance EMV implementation,” said Steve Sievert, executive vice president of marketing and communications for PULSE. “While PIN debit remains the most secure payment method in the market, this year’s study confirms the industry is reaching a tipping point toward EMV. The majority of financial institutions plan to issue EMV debit cards starting in 2015.”

Target breach was watershed event

The Target breach impacted every financial institution that participated in the study, causing fraud loss rates to increase in 2013 and compelling issuers to re-evaluate their strategies for improving card security in 2014, the study found.

Overall, 14 percent of all debit cards were exposed in data breaches in 2013, compared to 5 percent in 2012. The resulting 2013 fraud losses to financial institutions amounted to 5.7 basis points for signature debit and 0.7 basis points for PIN debit. Compared with the prior year, PIN debit fraud loss rates remained constant at 0.3 cents per transaction, on average, while signature debit loss rates increased to 2.2 cents per transaction, up from 2.0 cents.

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