800k terminals undergoing software update for 1 August PIN deadline

People will need to use a PIN rather than sign for credit, debit and pre-paid purchases made in person

Approximately 800,000 point of sale (POS) terminals in Australia will need a software update as the country phases out signature-based credit and debit card payments.

From 1 August 2014, consumers will need to use a PIN for credit, debit and pre-paid card purchases made in person. There will be no change to online transactions or contactless payments. For example, consumers can still use contactless payment options such as PayPass for purchases under $100.

According to Australian Retailers Association executive director Russell Zimmerman, most merchants won’t have to foot the bill for the POS terminal software update as this cost will be covered by the terminal’s provider.

“Business owners, merchants, retailers and the like should embrace this change as it’s about reducing fraud, thus saving time and money,” he said in a statement.

According to Zimmerman, restaurants, pubs and cafés are among those who will most likely notice the PIN change because patrons are often presented with a bill at their table which they need to sign for.

“In some cases, these [hospitality] retailers may need to upgrade to mobile terminals to continue receiving payment, and tips, in a normal manner.”

He suggested that merchants who may require new POS technology should speak to their terminal provider about upgrading equipment to make sure they’re ready for increased PIN use by August.

The change to PIN has been spearheaded by American Express, Diners Club International, MasterCard and Visa which, along with the major banks, form the Industry Security Initiative.

The Initiative has launched a campaign to let Australians know about the change called PINWise. In addition, banks are sending out pamphlets and emails to customers letting them know about the change.

According to MasterCard Australia country manager Andrew Cartwright, the change is designed to reduce fraud caused by use of lost or stolen credit/debit cards.

He said that fraud costs the payments card industry in excess of $35 million per year in Australia.

Cartwright pointed out that the United Kingdom moved to a PIN-only system in February 2006.

“We wouldn’t have done this in Australia if it hadn’t worked there.”

According to a UK report called Fraud the Facts 2013, fraud losses on UK issued cards went up in 2007 to 532.5 million pounds. In 2008, fraud losses reached 609.9 million pounds before dropping in 2009 to 440 million pounds.

In 2010, fraud losses on UK issued cards went down to 365.4 million pounds. It dropped again in 2011 to 341 million pounds before rising again in 2012 to 388 million pounds.

According to a global study called The Cashless Journey, which was conducted by MasterCard in 33 countries in 2013, only 15 per cent of payments in Australia are now made using cash.

Eighty-six per cent of consumer transactions in the country are processed via credit cards or mobile payments.

Australia is ranked in the top six countries that the payments provider has dubbed 'nearly cashless' along with Belgium, France, Canada, Germany and Sweden.

Follow Hamish Barwick on Twitter: @HamishBarwick

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

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