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Pulse debit study forecasts rise in EMV issuance, decline in ATM use

The Discover-owned network's 2014 Debit Issuer Study reveals increased debit use, a renewed focus on fraud prevention and EMV issuance, and sustained growth in debit as FIs promote the use of cards over cash.

June 25, 2014

Financial institutions weathered the Target data breach and are looking for solutions to enhance security, with many issuers now planning to implement EMV debit, according to the 2014 Debit Issuer Study commissioned by Pulse.

The study also found sustained growth in both consumer and business debit in 2013, as well as improved debit program performance as active cardholders increase their use of debit. Transactions per active card increased to 20.1 per month from 19.4 a year earlier.

To foster continued debit growth, issuers reported working both to improve current performance and to make their debit offering more attractive by incorporating merchant offers. As FIs continue to promote the migration of cash payments to cards, Pulse expects overall ATM use to naturally decline.

In 2013, ATM withdrawals reached a study-wide low of 2.3 per active card per month. Large banks expect ATM transactions to continue to decline, but community banks and credit unions project increased ATM transaction volume as they seek to drive traffic from the branch to the ATM.

Other key findings of the Pulse study:

• 14 percent of all debit cards were exposed in data breaches in 2013, compared to 5 percent in 2012;
• 84 percent of FIs reissued all exposed cards in response to the Target breach — typically only 29 percent reissue exposed cards as a standard response to breaches;
• 86 percent of FIs said that they plan to begin issuing EMV cards in the next two years, a significant increase from 50 percent in 2012.

“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,” said Steve Sievert, EVP of marketing and communications for Pulse.

Silvert said this year’s study confirms that the industry is reaching a tipping point toward EMV, with the majority of respondents saying that they plan to issue EMV debit cards starting in 2015.

“We were quite surprised by the across-the-board embrace of EMV by debit issuers,” said Tony Hayes, a partner at Oliver Wyman who co-led the study. “There has been a dramatic shift from issuers’ tepid interest last year to their active plans to implement EMV beginning in 2015.”