How many times have you received a new credit card this year?
It seems consumers are all too familiar with this process. Today we wanted to share how 2014 the “Year of data breach” has not only affected the consumer with credit card replacement fatigue, but also affected the banking industry with expenses.
When a data breach occurs to a retailer the banks are the ones issuing the cards and it has become quite expensive. Each new replacement credit card costs $5 – $10 a card. The costs are applied to the production of the card, mailing the card, activation, and call centers to help with client questions. What is even further interesting is the banks are doing this as an added service to their clients, which is fantastic. However, the cost to replacing cards has become so drastic that banks are now starting to fight back against paying the fees to reproduce the cards.
“The cost of replacing stolen Target’s breach alone is roughly $400 million — and the Secret Service has estimated that some 1,000 American merchants may have suffered from similar attacks.”
As more data breaches occur and more credit cards need to be reissued, that expense will naturally be passed off to the consumer. The question now is in the end of 2015 when 70% of credit cards and 41% of debit cards in the United States have security chips called EMV; will those chips help solve this credit card expense problem? Some believe the EMV terminals at $1,000 a piece will pass on the dollars to consumers as well. But what about Apple Pay? Could it be the answer? Using an iphone or Apple Watch to pay, taking a way the need for the card could be interesting, especially with 220,000 vendors using the wireless terminals.
Photo: Sean MacEntee