Market Overview

2018 Debit Issuer Study Finds Improved Issuer Performance, Lower Fraud Losses


The 2018
Debit Issuer Study
found that consumer debit use continued to
grow in 2017, contributing to improved overall debit performance, while
fraud losses per transaction declined for the second consecutive year.
On the mobile
front, the
13th annual survey
– commissioned by PULSE®,
one of the nation's leading debit/ATM networks, and conducted by Oliver
Wyman – found that cardholder enrollment in mobile wallets doubled
year-over-year while transactions per enrolled card remained flat.

Issuers also reported that the historical dichotomy of PIN and signature
debit is largely obsolete. PIN transactions used to be the sole domain
of electronic funds transfer (EFT) networks, while signature
transactions were the card brand networks' arena. Now, issuers
increasingly track how the card is used by the cardholder (in-store or
online, for example) rather than the network through which the
transaction is routed. This change was driven in part by growth in
transactions requiring no authentication and card-not-present purchases,
both of which are now offered by larger EFT debit networks such as PULSE.

"The debit landscape continues to change dramatically," said Steve
Sievert, Executive Vice President of Marketing and Brand Communications
for PULSE. "We've moved from the simple world of ‘PIN or signature' to
an array of options, including PINless
and signature-less
at the point of sale and biometric authentication in
digital commerce and mobile wallets. Meanwhile, advances in payments and
a stronger overall economy are resulting in improvements in debit's key
performance indicators."

Debit Performance Strengthens

Among the strong debit fundamentals highlighted by the issuers in the

  • Higher Penetration Rate: Seventy-six percent of checking
    accounts had associated debit cards in 2017, compared to 75 percent in
  • Increased Card Activation: The percentage of debit cards used
    at least monthly grew to 66 percent from 65 percent.
  • Greater Use: Among active consumer debit cardholders, debit
    cards are used to make 23.7 purchases per month, up from 22.9 last
    year, and an all-time high in the history of the study.

Fraud Losses Decline for Second Year

Based on fraud losses incurred by the study participants and
extrapolated to the entire U.S. debit industry, issuers lost an
estimated $850 million on point-of-sale debit transactions in 2017, a
5.5 percent decrease from 2016. This decline is likely due to the
transition to chip-enabled debit cards, which is now largely complete
for issuers. Surveyed issuers have converted 91 percent of their debit
cards to chip cards.

Card-not-present transactions may be more vulnerable to fraud due to the
lack of chip card authentication or, in the vast majority of cases, PIN
protection. Even though card-not-present transactions account for 21
percent of transaction volume, they represent 44 percent of net fraud
cases. The average net fraud loss associated with these transactions was
$123 per incident.

"As the industry has moved to chip transactions, fraud has migrated to
transactions that don't require a physical card," said Jim Lerdal, Vice
President of Fraud and Risk Management for PULSE. "Survey respondents
reported that the costs of this fraud are high, amounting to 10.5 cents
for every card-not-present transaction, of which issuers bear 1.7 cents,
on average. The remaining 8.8 cents constitute losses borne by merchants
and cardholder claims that are not charged back."

On average, issuers in the survey authorized nearly 95 percent of all
attempted debit transactions in 2017. The biggest reason for declined
transactions among this group is not suspected fraud, which impacted 0.4
percent of their debit transactions, but insufficient funds, which
affected 1.8 percent of transactions.

Mobile, Digital on the Move

The survey revealed that 86 percent of responding issuers support at
least one mobile payment option, up from 74 percent in the previous
study. Mobile payments are defined in the study as the ability to use a
smartphone to pay at a physical point of sale. Cardholder enrollment in
mobile programs doubled in the last year. However, transactions
initiated with a mobile wallet represented only 0.6 percent of in-store
debit card purchases in 2017, compared to 0.3 percent in 2016.

Enhancing digital capabilities topped the list of 2018 priorities for
survey respondents. They want to give cardholders tools for greater
control and flexibility in managing their debit card activity. Issuers
also want to communicate with cardholders for real-time verification and
fraud management, and even to automatically provision a digital card in
a mobile wallet while awaiting the issuance of a plastic card, for

"We see a real opportunity for financial institutions to enhance their
debit card offerings with new digital capabilities," said Tony Hayes, a
partner at Oliver Wyman who co-led the study. "There is a clear link
between greater cardholder engagement and overall customer loyalty and

About the Study

The 2018 Debit Issuer Study is the 13th installment in
the study series, commissioned by PULSE and conducted by Oliver Wyman,
an independent management consulting firm. The study provides an
objective fact base on debit card issuer performance and financial
institutions' outlook for the debit card business. Fifty-nine financial
institutions – including large banks, credit unions and community banks
– participated in the study. Collectively, the participants issue
approximately 148 million debit cards and represent 42 percent of the
U.S. debit market. The sample is representative of the U.S. debit market
in terms of institution type, geography and debit network participation.


PULSE, a Discover Financial Services (NYSE:DFS) company, is one of the
nation's leading debit/ATM networks. Financial institutions, merchants,
processors and ATM deployers across the United States and around the
world depend on PULSE's comprehensive suite of products and services and
its commitment to providing exceptional client service, flexibility,
security and superior economics. PULSE also is a resource for debit
education, research and knowledge drawn from more than three decades of
industry experience. For more information, visit

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