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Fed study finds that ATM, debit might be safer than credit cards

In 2012, PIN debit card transactions - including both purchases and ATM cash withdrawals - had the lowest fraud rates among general-purpose cards by both number and value.

August 18, 2014 by Rebecca Hellmann — Marketing and Sales Coordinator, Welch ATM

There is good news for banks and credit unions issuing PIN debit cards for use with purchases and ATM transactions. According to a revised study from the Federal Reserve, "The 2013 Federal Reserve Payments Study," PIN debit and ATM transactions might be safer than those made via credit cards or signature debit:

"Among general-purpose cards, single-message (or PIN) debit card transactions (including both purchases and ATM cash withdrawals) in 2012 had the lowest fraud rates by both number and value," the study authors said.

There were 3.92 unauthorized transactions per 10,000 transactions on card-present credit cards and 3.07 on card-present signature debit. In comparison, the rate of unauthorized transactions per 10,000 transactions using PIN debit and ATMs was 0.89.

Card-not-present fraud was estimated to be more prevalent at about three times the rate of card-present fraud. However, the value of unauthorized card-present and card not-present transactions was comparable.

The value of card-present fraud for debit signature exceeded that of card not-present counterpart by $1.55 per $10,000 spent, registering at $12.45 and $10.90, respectively. Card-present fraud for standard credit cards was $9.45 per $10,000 while card not-present fraud for these cards registered at $11.58 per $10,000.

Though the number of ATM withdrawals reached 5.8 billion with 283 million debit cards and 159 million prepaid cards, the value of debit PIN and ATM transaction fraud for 2012 was only $2.69 per $10,000.

With EMV security measures scheduled to begin taking effect at point-of-sale terminals in October 2015, and at ATMs in October of the following year, it is likely that card-present transactions — including PIN debit and ATM — will become even more secure.

photo courtesy neil turner | flickr