HOUSTON (9/11/15)--About 25% of U.S. debit cards--roughly 71 million cards--will be migrated to chip by the end of 2015, according to the 2015 Debit Issuer Study commissioned by the ATM/debit network PULSE.
Ninety percent of U.S. financial institutions either have begun issuing chip (Europay, MasterCard and Visa, or EMV) debit cards or plan to do so by the end of 2015. The percentage is expected to rise to 73% by the end of 2016 and 96% by the end of 2017, said the study.
Financial institutions estimate the cost of a chip debit card will be double that of a standard magnetic-stripe card. Large banks report the lowest average cost at $2.17 per chip card, while credit unions have the highest average cost at $2.90 per chip card.
While most financial institutions plan to begin issuing chip cards by the end of this year, the full rollout will take time. The majority of issuers (62%) plan to implement chip debit cards using an accelerated migration strategy.
That approach includes combining natural reissuance when their account holders' debit cards expire, with a targeted reissuance to heavy card users, international travelers and other customers who request a chip card. The other approaches are natural migration (used by 23% of issuers) and mass migration (used by 15%), according to the study.
Credit card issuers--including credit unions---and retailers have less than a month to embrace the global security standard developed by EMV before liability becomes a hot potato issue (News Now Sept. 2).
Oct. 1 marks the date when the major card companies will shift counterfeit liability to the least EMV-compliant party in a point-of-sale (POS) transaction (except transactions at automated fuel dispensers, which must be compliant by Oct. 1, 2017).
If neither or both parties--card issuer and merchant--are EMV compliant, the fraud liability will remain unchanged from current rules. However, if one party is the cause of a chip transaction not occurring, it will be held financially liable for any resulting card-present counterfeit fraud losses.