Five-year reissuance cycle? More like five cards in a year, due to fraud concerns
Nearly half of the cardholders in the U.S. have had at least one card reissued in the past year, with those experiencing fraud multiple times saying they have had nearly five cards reissued, according to recent Auriemma Consulting Group research.
Increasingly, consumers are not bothered by the reissuing of cards, with many appreciating the fact their banks are proactive in sending new cards to avoid fraud problems or pre-empt a card's expiration.
A third of the cardholders experiencing the process of obtaining a new card had a debit card reissued, while 20% said their credit card had to be reissued. Auriemma conducted interviews with 800 debit cardholders during the month of September in compiling its first data on card reissuing in its fourth-quarter Payments Report.
Overall, for both debit and credit cards, one third of cardholders said they were reissued a card because it had expired, while 27% cited fraudulent charges as the reason for a new card. Another 26% said their magnetic stripe cards were reissued as EMV chip cards.
The research did not calculate the cost to card issuers for reissuance related to fraud or EMV chip conversion, but the banking industry has established a range from $3 to $25 per card, depending on how the card is manufactured and what is included in the mailing.
More importantly to card issuers, the Auriemma study found, is what the reissuing experience does to the cardholder's use habits — especially for the consumer's most frequently used card.
And the news is fairly good on that front.
"The most compelling stat, I think, is that reissuance may have caused about one in five cardholders to switch their most frequently used card," said Jaclyn Holmes, senior manager of payments insights for Auriemma Consulting Group.
But another one-quarter of cardholders say they made their reissued card their most frequently used card, Holmes added. "From an issuer standpoint," she said, "this can be very promising."
Those types of consumer actions fall in line with what the report revealed about their general feelings on card reissuance.
More than eight in 10 cardholders (84%) said they appreciate when their issuers proactively send them new cards, and 80% expect their issuers to automatically send them new cards if there is a data breach at a merchant where they had shopped.
Twenty-seven percent rate card reissuance as somewhat or extremely inconvenient, whereas 41% said it was "just a little" inconvenient and 32% said it was not inconvenient at all.
Issuers have some technology at work that can make things smoother, Holmes said.
"Most cardholders don’t find reissuance inconveniencing, but issuers have started to implement mobile features to eliminate usage gaps during periods of reissuance," Holmes said.
The Capital One Wallet is an example in which customers can access their new card’s number, expiration date, and CVV within the app for online purchases, Holmes added. "They can continue using their old card until the new one arrives in the mail."
These types of features can help banks reduce switching of one’s top-of-wallet card during the reissuance window, while also building customer engagement with their app, Holmes said, adding that the majority of cardholders, at more than 70%, find those types of features valuable.
In other findings, 44% of respondents indicated their most recently reissued card was linked to recurring payments. That number rose to 50% among college graduates and 51% among city residents.
Related to recurring payments, 87% said they consider automatic updates of recurring payment accounts with the new card to be a valuable service from an issuer. Among cardholders whose issuer actually provided those services, the perception of it being a valuable service rose to 93%.
Of those with reissued cards, 75% said they spend about the same on their new cards as they did on the previous card. Just 12% who had a card reissued because of fraudulent charges said they have been spending less on the card since it was reissued.
Among the small number of people (75) who experienced fraud multiple times in the past year, 89% of those cases had fraudulent charges all on one card.
Despite the ongoing news of data breaches and some cards being reissued simply as a safety measure, 78% of respondents said they have not experienced fraud on any of their payment cards in the past year.