Millions of Australian credit or debit cardholders could be left unable to sign for goods this Friday, as signatures on credit cards are abolished.
At the end of the week most consumers will not be able to sign for purchases and will need to use a PIN on their credit or debit cards in an industry move to counter the 25 per cent of credit card fraud made in person.
However, the switch to pin numbers will make no difference to purchases under $100, that can be bought simply by swiping or tapping a card.
While business owners are well informed, there are fears consumers will be stuck with a bill they literally cannot sign for.
Leading bank ANZ said while at least 83 per cent of its customers had a PIN, it was still expecting many people to experience problems, despite communication from the bank.
Likewise, research from EFTPOS provider Tyro Payments found PIN usage at small-to-medium businesses has increased from 59 per cent in November 2013 to 78 per cent of payment transactions in 2014.
“Despite a comprehensive campaign to remind customers of the change we still have around 700,000 cards that are not being used with a PIN,” ANZ’s Managing Director Products and Marketing, Matt Boss said.
Customers who currently don’t have a PIN will need to contact their bank and request one.
Kirsty Lamont, director of Australian banking and insurance comparison website Mozo, welcomed the changes as a major step forward for security.
“It’s been in the pipeline for a while,” she said of the development.
There will also be exemptions for people with mental and physical disabilities and impairments such as dementia or blindness, with plans in place for signature only cards.
I think it’s a great move. It’s a hell of a lot easier for scammers to fake your signature than it is to guess your pin.
The hospitality industry fears the changes could mean the end of tipping as well as inconveniencing diners who will be forced to head to the register to punch in their pins to pay.
EFTPOS provider Tyro Payments co-founder Andrew Rothwell said tips are expected to fall by double digits.
That’s because when signing for the bill customers can insert a tip at the bottom of their credit card transaction, while with a PIN the amount is generally locked in.
Why erase the PIN?
The aim of the move, which is dubbed PINwise, is to increase security and eliminate escalating card fraud.
The Industry Security Initiative (ISI) is made up of members from all Australian financial institutions that issue Visa, MasterCard, American Express, Diners Club cards.
The ISI believes a PIN only system helps protect against fraud due to lost or stolen cards because the scammer would need to have both your card and your PIN.
Will there still be card fraud?
The short answer is yes. Credit card fraud is a consistently reported problem that is usually handled by state police branches unless the fraud is of a large scale.
In May, Victoria Police issued a statement revealing that deception figures had increased from 24,102 to 35,703 over the past year. It is also growing online.
“Our analysis has clearly identified that victims are reporting significantly more deceptions involving stolen credit cards being used for multiple low level transactions – under $100 – at retail stores,” the statement said.
“We have also established clearly from victims reports that around ten per cent of these deceptions have involved a credit card being stolen from a vehicle, and a further ten per cent by way of residential burglary.”
Do all transactions need a PIN?
No. You only need a PIN when you are physically present when buying goods or services. If the purchase item is under $100 then you will not require a PIN.
Similarly, small purchases under $35 that currently require no PIN or signature will remain unaffected, as will purchases made at unattended terminals such as vending machines and parking meters.
A PIN is also not required for mail or telephone order transactions, or transactions made using the Internet.
Consumers an still tap their cards and use payWave where the technology is available as long as the transaction is under $100.
The exceptions to the rule
Banks will retain an option to issue signature only cards for people with special requirements who experience mental and physical disadvantage, such as the blind and people suffering dementia.
The move has been welcomed by Alzheimer’s Australia national president Graeme Samuel, who said it was “a relief” that the unique challenges of people with dementia had been taken into account.
“Memory loss is one of the common symptoms of dementia, and without the alternative option of a sign only card, the PINwise initiative could bring further barriers for people living with dementia to participate in everyday activities.”
What will be next to go?
The end of the credit card signature is indicative of the rise of the digital world, says Ms Lamont.
“Gradually, we’re seeing that payment technology is becoming less manual and more electronic.”
She predicted the trend to continue, listing cheques as an example of what could go next: “I can’t see that they’re going to be here in the foreseeable future.”