Pub. 4 2015 Issue 1

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 18 T HE DEBIT ISSUER STUDY, COMMISSIONED annually by PULSE, has proven its value during its first nine years. For instance, five years ago, the 2009 Debit Issuer Study predicted the rise of mobile banking. Six years ago, the study identified quick-service restaurants and bill payment as important growth opportunities for debit. Seven years ago, the study stated, “Mobile devices may replace the traditional card as the primary debit transaction source.” Well, you can’t get them all exactly right. As has been the case since the first Debit Issuer Study was commissioned in 2005, the 2014 study objectively presents facts about debit card issuer performance and perspectives across electronic payments. It reaches far beyond PULSE issuers, seeking data and insights from 71 banks and credit unions across the spectrum of type, size, location and network participation. In fact, participating financial institutions collectively represent more than 140 million debit cards and 76,000 ATMs. Some findings have been constant over the years, such as optimism about debit growth, concerns about fraud and the constant tweaking of rewards programs. The impact of major disruptive events also has been tracked and reported, such as how belt tightening following the recession increased consumer preference for debit, and how Regulation II prompted financial institutions to reassess business strategies related to their debit programs. The 2014 Debit Issuer Study reported on the impact of another major disruptive event: high-profile data breaches. Many financial institutions are reacting by ramping up their plans to issue EMV cards – something that previously seemed stuck in neutral. The Target breach over the holidays last year proved to be a great motivator for financial institutions and the cardholders they serve. The highly publicized breach affected between 70 million and 110 million customers, many of whom lost both payment card data and personal information, and impacted every one of the 71 financial institutions that participated in our study. Eighty-four percent reported reissuing all cards exposed in the breach. This is far greater than the 29 percent of banks and credit unions that typically reissue exposed cards as a standard response to a breach. This year’s study confirms the industry is reaching a tipping point toward EMV, with 86 percent of respondents telling us they plan to begin issuing EMV cards in the next two years, a significant increase from 50 percent in 2012. Indeed, the industry continues to come together to look for solutions to advance EMV implementation and increase security. Security a Key Objective To say the Target breach was a watershed event for the industry is an understatement. Separate reports from the Consumer Bankers Association and the Credit Union National Association estimate the cost to financial institutions of replacing the payment cards compromised in the breach at more than $200 million. DATA BREACHES HASTEN EMV MIGRATION PLANS; LATEST DEBIT ISSUER STUDY SHOWS RENEWED CARD SECURITY FOCUS By Steve Sievert Executive Vice President, PULSEMarketing and Communications