According to the results of a recently published survey, U.S. financial institutions substantially increased issuance of chip debit cards in 2016 and experienced reduced fraud losses.
Since the fraud liability shift for most debit transactions took effect in 2015, an estimated 80 percent of U.S. debit cards have been converted to chip cards. The "2017 Debit Issuer Study" commissioned by PULSE, a Discover Financial Services company, also found that fraud loss rates dropped by approximately 28 percent in 2016 compared to 2015 levels.
However, the study confirmed that fraud continues to challenge card issuers as U.S. financial institutions lost an estimated $900 million to debit card fraud in 2016.
“The financial services industry has taken a number of measures that likely impacted the reduction in fraud losses for debit card issuers,” said Jim Lerdal, vice president of fraud and risk management for PULSE. “Among them are the conversion to chip debit cards, greater use of tokenization in mobile commerce and continued investment in fraud-mitigation solutions.”
But reducing card fraud is not a simple prospect, according to Lerdal.
“The more financial institutions tighten fraud-tolerance limits, the more they risk negatively impacting the cardholder experience,” he added. “It is a balancing act because declining potentially fraudulent transactions could lead to ‘false positive’ fraud identification, which can frustrate account holders and potentially drive them to other methods of payment.”
For more information about the study, click here.
