Debit Cards Lag Behind Credit In Transition To Chip


If you, like me, have been wondering why you haven’t yet received the EMV® version of your debit card, here’s the short answer: federal regulations.

According to a recent article in Payments Source, the Durbin Amendment requires an application identifier on debit cards that delayed by several months the coding and issuance of debit chip cards. As a result, only about a quarter of the approximately 71 million debit cards in circulation in the U.S. will be migrated to EMV technology by the end of this year.

The good news, according to the 2015 Debit Issuer Study commissioned by PULSE, is that 90 percent of U.S. financial institutions have either begun issuing debit chip cards or plan to do so by the end of 2015. Market saturation is expected to reach 73 percent by the end of 2016 and 96 percent by the end of 2017.

“The 2015 Debit Issuer Study provides the most compelling evidence so far that we are quickly approaching the end of magnetic-stripe-only cards and entering the era of chip cards,” said Steve Sievert, executive vice president of marketing and communications for PULSE, in a prepared statement. “With fraud continuing to be a major concern among cardholders and a top priority for financial institutions, the issuance of chip cards represents a major step toward reducing losses from counterfeit cards.”

The study also reveals that financial institutions estimate the cost of a chip debit card will be double that of a standard magnetic-stripe card. Large banks reported the lowest average cost of $2.17 per chip card and credit unions reported the highest average cost at $2.90 per chip card.

“The industry’s migration to chip debit cards is not motivated by the promise of profits,” said Tony Hayes, a partner at Oliver Wyman who co-led the study, in a press release. “Instead, issuers report that they are investing to help safeguard cardholder information, enhance the integrity of the overall payment system and protect their own reputation.”

Meanwhile, the U.S. just passed the long-awaited EMV liability shift date on Oct. 1, when the party to a payment transaction that’s unable to accept chip-card technology became liable for fraudulent magnetic stripe transactions at the point of sale. TransFirst® has been supporting and educating merchants about the importance of transitioning to EMV with whitepapers, eguides, infographics and webinars.

If you’re a merchant or service provider who is not yet EMV compliant, talk to a TransFirst representative to find out just how easy it is to protect yourself, your business and your customers by adding chip card technology to your processing plan.

EMV is a registered trademark or trademark of EMVCO LLC in the United States and other countries.

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