SAN FRANCISCO (5/21/15)--Visa announced plans last week to increase the amount it reimburses financial institutions for cards they redistribute in the aftermath of data breaches.
The amount reimbursed per card also will follow a tiered structure, with smaller institutions receiving more than larger institutions--a practice that will replace the card network’s current flat reimbursement rate of $2.50.
Visa said that the new tiered structure based on issuer size will ensure that recoveries align more closely with current estimated costs and risks that result from account data compromise events.
Financial institutions that record less than $500 million in purchase volume on Visa cards, or those in the “small” category, will receive $6 per mag-stripe card and $7 for cards containing card-chip technology.
Medium-sized financial institutions that see between $500 million and $10 billion in purchase volume will receive $3.85 for mag-stripe cards and $4.85 for chip-enabled cards.
And those that record more than $10 billion in purchase volume will receive $2.65 per mag-stripe card and $3.65 for chip cards.
“While we are still reviewing the potential impact of the new tiered structure, we are hopeful that it will help credit unions and other relatively small issuers recover a greater percentage of reissuance costs than under the previous reimbursement structure,” said Luke Martone, CUNA senior director of advocacy and counsel.
The average cost for credit unions to reissue cards is $8.02, according to numbers compiled by CUNA last year in the aftermath of the Home Depot data breach, an incident that cost credit unions nearly $60 million.