A 2014 Debit Issuer Study commissioned by Discover Financial Services’ Pulse network has revealed the impact of the 2013 Target and other major retailers data breaches on the debit card industry. An average of ten percent of debit cards were impacted by the breach. It also revealed that while most data breaches result in about 29% of issuers reissuing exposed cards, this particular breach resulted in 84% of the financial institutions reissuing all of the cards that were exposed.
This article was first published on the PLC Blog
We have seen the impact of the breach in the form of an increase in certain declines that indicate a closed account or potentially fraudulent activity. When viewing data from Paul Larsen Consulting merchants in aggregate, for a mix of credit and debit cards, the rate of Invalid Account Number declines more than doubled over the same time prior year, from just over 9% to 19%. Also on the rise were restricted card and pick up card declines:
Change in Declines After Target Data Breach
The good news is that many of these accounts are recoverable with the right tactics and tools in place, most importantly utilizing the account updater programs available. The bad news for recurring merchants is that there will still be some involuntary churn due to non-participating issuers in the updater programs or by using a recovery strategy that isn’t optimized.
The risk of future data breaches is far from over. As recently as this month, an additional data breach was discovered, this time at P.F. Chang’s restaurants. Initial tallies are claiming as many as 7 Million cards may have been affected.
The call for greater security is growing ever louder as the costs of these data breaches continue to rise for issuers, merchants, and consumers.
Paul Larsen, our INSIDER Guide to Payment Processing, is the Founder and Managing Partner of Paul Larson Consulting (PLC), a consulting company focused exclusively in the area of payment processing – specifically on recurring and installment billing merchants in the card-not-present (CNP) space. With over 700 clients, PLC’s expertise helping card not present businesses significantly improving their bottom line by both reducing costs and increasing customer retention. (Read Paul’s full Bio)
