Nearly 14% of all US debit cards were exposed in data breaches in 2013, compared to 5% in 2012, according to a survey conducted by Discover Financial Services’ Pulse ATM network.
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, the research report says.
The study found that around 10% of all US debit cards were affected in the Target incident, and the majority of financial institutions affected were pushed to reissue cards.
The Target breach could speed up the switch to chip-based EMV cards. Nearly 86% of financial institutions who participated in the survey stated that they plan to begin issuing EMV cards in the next two years, a significant increase from 50% a year ago.
Steve Sievert, executive vice president of marketing and communications for PULSE, said: "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.
"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," Sievert added.
The study also found that consumers are using their debit cards more — the average card was used 20 times a month in 2013, up by one transaction from 2012. The average debit card was used for $8,875 of purchases in 2013, up $122 from the previous year.
The 2014 Debit Issuer Study is the ninth installment in the study series. Seventy-one financial institutions – including large banks, credit unions and community banks – participated in the study, conducted by Oliver Wyman.