COLUMBUS, Ga. (10/21/14)--Consumer fears about security are leading to a drop in debit-card use, according to a new report from TSYS.
Despite the drop, debit cards remain the most popular form of payment, according to the study. Forty-three percent of respondents preferred debit as their overall payment type, while 35% indicated their preferred payment type was credit. There are roughly 51 million debit cards and 15 million credit cards issued by credit unions.
Those percentages represent a decrease in respondents who preferred debit from TSYS' 2013 study, in which 49% indicated they preferred debit.
"Consumers, concerned about the security of their cards and payments, are both demanding and accepting of market changes," the study said. "Consumers have a heightened awareness of security, due to both the media and their own experiences. We found that consumers are interested in tools such as transaction authorization controls, instantly viewable transactions and text message alerts to help them protect their accounts."
Consumers are interested in new card security features, but are familiar with some features more than others, according to the study. About 48% of respondents said they have heard of chip cards, and 14% indicated that they have already received a card with a chip.
Tokenization is also gaining interest as a fraud- and risk-protection tool. The Credit Union National Association fully backs advancements in card data security technology, but until these take hold nationwide, CUNA's leaders say, credit unions and other financial institutions will still be at risk to suffer significant losses as a result of data breaches.
Meanwhile, only 47% of businesses expect to have their payment terminals updated with EMV chip technology by the end of next year, according to the Payments Security Task Force.
Although industry participants understand tokenization and how it will help to reduce payment risk, not as many consumers are familiar with the technology. Only 8% of respondents indicated they had heard of tokenization, and 16% said they would be willing to take the steps necessary to request a token.
The report also explored consumer sentiment toward mobile payments. "Fraud prevention and risk reduction tools are the most important features to consumers when they consider incorporating mobile into their payments process," the report said. "When asked about the use of smartphones in conducting different types of payment transactions, we saw that consumers were very interested in taking part in protecting their accounts by using mobile tools to monitor and track payments."
Use of rewards or offers continues to be the biggest controllable factor of influence on which card a consumer uses to pay. However, even with rewards, some consumers chose to use debit cards to closely manage their daily spend or budget, while other consumers use multiple cards and can be more easily influenced to change.