Data Breaches Make EMV Migration a Priority
We are on the cusp of entering the age of EMV implementation in the U.S., according to the 2014 Debit Issuer Study commissioned by PULSE. After years of uncertainty and delay, the vast majority of debit card issuers now say they plan to issue EMV cards in the next two years.
Migration to EMV debit cards will begin in earnest in early 2015 and will span approximately three years, with many issuers attempting to provide chip cards to their international travelers and heavy debit users in advance of the liability shift in October 2015.
This year’s Debit Issuer Study found tremendous impacts from merchant data breaches, including a collective acceptance that EMV migration will provide enhanced security.
- Large banks are leading the way, with 96 percent planning to begin issuing EMV cards by the end of 2015.
- Credit unions and community banks aren’t far behind, with 83 percent of credit unions and 78 percent of community banks targeting 2015 for EMV migration.
- The 86 percent of respondents who said they expect to issue EMV cards in the next two years is a significant increase from 50 percent in 2012.
“This year’s study confirms 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.
Fraud Trumps EMV Concerns
Concerns about EMV haven’t gone away. Prior to last year’s high-profile data breaches, many financial institutions were hesitant to commit to EMV. The concerns centered around matters of logistics and expense:
- Uncertainty around merchant adoption of chip card point-of-sale terminals;
- Questions about the viability of the business case for migrating from magnetic stripe to chip;
- Issues related to regulation and support for merchant routing choice.
Today, there is greater urgency to resolve these issues because further delays in EMV migration may put issuers at greater risk. In addition, a series of agreements between signature and PIN debit networks has created a pathway for resolving the merchant routing issue.
At a tactical level, the most common approach among financial institutions is to provide account holders with an EMV debit card as part of their regular card reissuance cycle.
The Debit Issuer Study, conducted by Oliver Wyman, examines debit card issuer performance and expectations for the debit card business. This was the ninth installment in the study series. A total of 71 financial institutions participated, including large banks, credit unions and community banks. Collectively, study participants issue approximately 142 million debit cards, representing approximately 45 percent of total U.S. debit transactions.
PULSE participants can learn more about the study at www.pulsenetwork.com and listen to a PULSE Academy® webinar presenting key survey findings by accessing the “Webinars & Webcasts” page in the Knowledge area of our website.