Transaction Trends

A report released by PULSE Network, a subsidiary of Discover Financial, has found that fraud loss rates dropped by approximately 28 percent in 2016 compared to 2015 levels and that US financial institutions have also substantially increased issuance of chip debit cards in 2016.

According to the study, since the fraud liability shift that took effect in 2015, an estimated 80 percent of US debit cards have been converted to more secure chip cards.

“The financial services industry has taken a number of measures that likely impacted the reduction in fraud losses for debit card issuers,” Jim Lerdal, Vice President of Fraud and Risk Management for PULSE, said according to a press release on the study, “among them are the conversion to chip debit cards, greater use of tokenization in mobile commerce and continued investment in fraud-mitigation solutions.”

Despite these significant reductions in fraud loss levels, the study confirmed that fraud continues to be a significant financial burden for issuers. According to study estimates, U.S. financial institutions lost $900 million to debit card fraud in 2016.

The study also found that debit card usage grew in 2016, with the total number of debit transactions rising an average of 7 percent year-over-year in 2016. Furthermore, the report said, the number of debit transactions per active customer grew to a record 23.6 transactions per month, a six percent increase over last year. According to Steve Sievert, Executive Vice President of Marketing and Brand Communications for PULSE, this represents a 39 percent increase in average debit card usage since 2010.

The PULSE Network study was commissioned by PULSE Network and conducted by Oliver Wyman, an independent management consulting firm, according to a press release from PULSE Network. A representative cohort of 50 financial institutions participated in the study. The full results can be found here.