PULSE® Perspectives – September 2023

Young man talking on the phone and pointing to his laptop

Each quarter, PULSE looks at the trends shaping the world of debit and shares insights on recent developments impacting issuers. In this edition, we focus on the growing threat of “friendly fraud” and review a recent study highlighting debit spending and usage habits among consumers – particularly younger consumers. We also highlight a new resource that helps clarify the impact of Regulation II on merchants, acquirers, issuers and other stakeholders.

Friendly fraud tops criminal fraud

The 2023 Chargeback Field Report reveals a big increase in chargeback fraud, says The Paypers. The report from chargeback-management firm Chargebacks911 found that nearly three-quarters of the merchants surveyed experienced an uptick in first-party chargeback misuse, or “friendly fraud,” with an average increase of 19% compared to last year’s survey. On average, the report found that 44% of chargebacks were the result of friendly fraud, making this type of fraud a larger concern than criminal fraud.

PULSE Perspective: PULSE is committed to delivering industry-competitive, high-volume and high-efficiency solutions for chargeback life cycle processing. We work closely with FICO to continually enhance our fraud model and identify new ways of detecting and preventing fraud.

The case for debit gets stronger

Payments Journal reports on findings from a recent study from Mercator Advisory Group for Discover® Global Network. It found that 55% of consumers are using debit significantly or somewhat more than they did a year earlier. Forty-six percent of consumers 20-24 years old, and 44% of those 18-19 years old, said they are more likely to use debit in digital channels compared with other payment types. About half of Gen Z consumers rely on debit at grocery stores, while more than 40% use debit for everyday transactions.

PULSE Perspective: Debit remains an important touchpoint for institutions to engage with, and deliver value to, consumers, including younger consumers who can otherwise be hard to reach.

U.S. payments forum offers Reg II resource.

The U.S. Payments Forum (USPF) has answers for those with questions about the Federal Reserve's clarification requiring debit card issuers to enable routing choice for all debit card payments, including card-not-present (CNP) transactions. Their white paper outlines the technical and operational impacts of the clarification, focusing on CNP use cases and associated technologies and processes, such as tokenization and card-on-file transactions. The clarification took effect July 1.

PULSE Perspective: As a member of the USPF’s Debit Routing Working Committee, PULSE sees the white paper as an important resource in helping industry participants understand the full range of implications of the Reg II clarification.