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Bill Dinker, EFT Source
Bill Dinker, EFT Source
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3 Reasons Why Data Breaches Should be Combated with Card Instant Issuance

Instant card issuance can help banks quickly react to a data breach, cutting costs and improving customer service.

According to Identity Theft Resource Center (ITRC),, the number of data breaches in 2013 increased 41 percent compared to 2012 causing the number of compromised cards to skyrocket from 2.65 million to an alarming 46.5 million this past year. Illustrative of the compounding problem, Javelin’s 2013 Data Breach Fraud Report concluded that a consumer’s chance of falling victim to a data breach has increased – from one in nine in 2010 to one in four last year. This, coupled with the recent and high-profile breaches, has made the issue of compromised card data top of mind.

Bill Dinker, EFT Source
Bill Dinker, EFT Source

How a financial institution reacts in the days that follow a data breach are crucial to its recovery. The bank must juggle a litany of procedures, execute forensic examination of internal systems, notify affected third parties, expend more resources, and prepare a legal response. They must also manage customers and reissue replacement cards for affected account holders quickly and conveniently. But when a large data breach occurs, the high volume of mass reissues can increase the time a cardholder must wait to receive the replacement card in the mail, further damaging the brand and jeopardizing customer relationships.

The solution? Instant card issuance.

The Power of Instant Card Issuance

According to reports, an estimated 40 million accounts were affected by the recent data breach. That’s 40 million credit and debit cards that will need to be reissued. While a service bureau is better suited for mass reissues, certain situations necessitate an institution to use innovative technology to provide timely resolution. Instant card issuance has proven to be a viable solution to emergency card replacement for key three reasons:

1. Maintain Superior Customer Service | A data breach causes a great deal of stress for account holders, and they want it resolved quickly. During this last debacle, financial institutions that had implemented an instant issuance solution were able to offer their cardholders a personalized, permanent replacement card on the spot. By immediately replacing a card, the bank provides superior customer service, increasing customer satisfaction and loyalty.

2. Generate Significant Cost Savings | A single data breach can cause a financial institution to incur significant expense. The shipping costs alone, which can grow exponentially in the event of a short notice mass reissue of cards by mail, can be staggering. Last year, the CBA reported that the average cost of traditional card replacement, which includes the physical card, informing the customer that a new card has been reissued, shipping, activation, and necessary supplemental information, is $10 per card. Leveraging instant issuance eliminates shipping and handling expenses while also reducing the chance of a replacement card getting lost or stolen during transit.

3. Reduce Potentially Lost Revenue | Traditional card replacement by mail can take as many as 10 days. This method of card delivery creates a time period during which the account holder cannot use the card and the bank cannot subsequently profit from each card swipe. Through instant issuance, delivery time is reduced from days to minutes, and earns the interchange revenue it would otherwise miss, ultimately increasing profitability.

The Future of Data Breaches & EMV

As consumers continue to utilize debit or credit cards as payment vehicles, data breaches will continue to occur. In response, U.S. lawmakers are seriously discussing stronger card security and a need for EMV chip card adoption – a payment method that’s been in place across the globe for years and has proven to lower financial losses associated with lost or stolen cards. Visa and MasterCard are aiming to have chips in most U.S. cards by October 2015, which is quickly gaining support.

[For More on the Target Breach and EMV: Will Target Data Breach Speed EMV Adoption in US?]

While chip cards will undoubtedly lower risks, fraud and data breaches will continue regardless. Financial institutions must have a quick and cost-effective response to such harmful attacks. Though it should not be regularly used to execute concentrated, high-volume card delivery, instant issuance can be leveraged in the precious hours that follow a critical data breach to reduce damage, salvage customer relationships and preserve the overall health of an institution.

Bill Dinker is the president of EFT Source, which provides an instant issuance technology for financial institutions.

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Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
2/18/2014 | 8:00:49 PM
re: 3 Reasons Why Data Breaches Should be Combated with Card Instant Issuance
You're completely right about tokenization. That has really gotten lost in all of this. People are paying more attention to EMV now, but EMV wouldn't have helped in the case of the Target breach. Tokenization would have. That said from a bank's perspective instant card issuance would be a big help in this kind of situation because of the cost savings and speed on replacing those cards. But you're right that it wouldn't be a solution to the problem of data breaches.
hfalcon370
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hfalcon370,
User Rank: Apprentice
2/15/2014 | 4:48:09 PM
re: 3 Reasons Why Data Breaches Should be Combated with Card Instant Issuance
The issuing of new cards is not a solution, the solution is to make sure that information is not made available when the hack is successful. Pesonal information should not be on the same server and should be incrypted. The CVV, expiration date and the full PAN should never be stored nor should the PIN for debit. Whatever happened to Tokenization. When the Card Brands get serious and place security of payment over marketing by retailers will fraud be reduced.
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