Changing over from magnetic stripe-based credit cards to EMV chip-enabled ones has been going on since last year, but what about debit cards? They are getting chipped too, according to the new 2016 Debit Issuer Study, commissioned by PULSE. It found that optimism is on high when it comes to EMV’s ability to keep consumers payment card information secure.
As is the case with credit cards the October 2015 liability shift from banks to merchants has ensured that financial institutions are rolling out chip-enhanced debit cards. The study also found that while debit cards with chips are being embraced banks are also more interested in supporting mobile payments.
“In this sea of change, core debit performance metrics remain strong, with debit use growing with each installment of the study,” said Steve Sievert, executive vice president of marketing and communications for PULSE. “This year’s results provide key facts behind the shift to chip debit cards and mobile payments, two of the most significant developments within the payments industry.”
Speeding towards being chip enhanced
With the October 2015 liability shift on their minds, by the end of 2015, 45% of issuers were in the midst of rolling out chip-enabled debit cards, but it is still not on par with what expectations had been with 90% of issues indicating in last years study that they were gearing up to roll out new debit cards.
When using issuers’ actual card migration ratios they estimated in the study that one-third of all debit cards were outfitted with a chip by the end of the year. And they forecast that three out of four will be chip enabled when we ring in 2017.
What about mobile payments? The study found that card issuers are on point with outfitting their debit cards so they can be used via mobile wallets, moreso than consumers who seem to be holding back when it comes to using their mobile devices to make payments. That said, Apple Pay is the most popular mobile wallet, with 3.5% of eligible debit cards loaded into its system, while Samsung Pay and Android Pay hold just 0.2%.
Merchants slow to adopt EMV terminals
With the slow adoption of EMV by merchants, usage is limited. This is even true with people who are using chip debit cards, with only 11% of their chip card transactions taking place at chip-enabled terminals–and the 89% leftover were processed via the older magnetic stripe or online purchases.
When you take all this into account, chip debit transactions – meaning chip cards used at chip-enabled terminals–made up just 4% of total debit transactions.
Yet even with all of this, chip debit transactions are on the rise and continue to grow at triple-digit rates year-over-year with issuers viewing the move over from stripe-based cards to chip enabled cards as a much needed step in upping security.