A new study estimates that 14 percent of all debit cards in the U.S. were exposed in data breaches in 2013, up from only five percent in 2012.
The upsurge is chronicled in the 2014 Debit Issuer Study. The report is now in its ninth edition, and was commissioned by PULSE, a debit/ATM network serving roughly 6,000 financial institutions across the U.S. The study itself was performed by management consultancy Oliver Wyman. Seventy-one financial institutions participated in the study, 29 of which have at least $10 billion in assets.
The report cited the Target breach as a watershed event for the industry, noting that it caused fraud rates to increase and card issuers to reevaluate their strategies for improving card security.
According to the report, 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.
“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, in a statement. “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.”
According to the study, the resulting 2013 fraud losses from to financial institutions amounted to 5.7 basis points for signature debit and 0.7 basis points for PIN debit. PIN debit fraud loss rates remained constant at 0.3 cents per transactions on average, while signature debit loss rates went up slightly to 2.2 cents per transactions, from 2.0 cents.
The study also found that 86 percent of financial institutions plan to begin issuing EMV cards in the next two years, a significant increase from 50 percent in 2012. In May, MasterCard proposed the creation of an industry group to push adoption of the technology forward.
“We were quite surprised by the across-the-board embrace of EMV by debit issuers,” said Tony Hayes of Oliver Wyman, which partnered in the study, in a statement. “There has been a dramatic shift from issuers’ tepid interest last year to their active plans to implement EMV beginning in 2015.”
