Countdown begins for switch from debit/credit card signature to PIN

Signing for debit/credit card purchases to be phased out between 1 August and 18 October

Banks are reminding consumers that they will no longer be able to sign when they make purchases on their debit and credit cards in Australia from 1 August 2014. Instead, people will need to use a PIN – part of a move to decrease card fraud in Australia.

The move to PIN will be rolled out gradually between 1 August and 18 October 2014 to give time for people to get used to the change. Approximately 800,000 point of sale (POS) terminals in Australia need a software update as the country phases out signature-based credit and debit card payments.

RMIT University associate professor Asha Rao, who specialises in information security, told Computerworld Australia that PINs are safer than signatures.

“PINs use EFTPOS terminals which have a PIN pad. This [pad] is tamper resistant and it will shut down if someone tries to break into it,” she said.

Rao added that most checkout staff “almost never” look at people’s signatures to see if they match.

“The other thing with signatures is that they are written on the back of the card whereas a PIN is not.”

A PIN may help make in-store purchases more secure, but it doesn't really address online purchases.

“On the other hand, if you are using your card to make purchases online your PIN does not help at all because the retailer does not ask you for a PIN.”

In addition, services such as PayPass and PayWave where people tap or swipe their card don’t require a PIN. However, Rao said the transaction limit on these services is capped at $100.

“My advice to consumers is to always keep an eye on your transactions and report any anomalies to your bank as soon as possible.”

According to Commonwealth Bank of Australia's merchant solutions managing director, Andrew Cheesman, the move to PIN is a “positive step forward” for retailers and consumers.

“The more businesses prepare for the change, the sooner they’ll benefit from faster payments and a reduction in the number of dispute and fraudulent transactions,” he said in a statement.

CBA has teamed up with hospitality industry body Restaurant & Catering Australia to provide support to bar, nightclub and restaurant operators.

This is because the transition to PIN has the potential to reduce the volume of tips. According to Cheesman, this accounts for a “considerable portion” of earnings for some clubs and restaurants.

Restaurant & Catering Australia CEO John Hart said he partnered with CBA because the bank offers payment terminals that allow patrons to tip restaurant staff, split bills and process credit cards at the table.

In March 2014, MasterCard Australia country manager Andrew Cartwright said 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,” he said at the time.

According to a UK report called Fraud the Facts 2013, fraud losses on UK issued cards went up to 532.5 million pounds in 2007. 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.

An ME Bank spokesperson told Computerworld Australia that its focus has been on card users rather than merchants because it does not play in the merchant space.

“We have been running a [PIN] education campaign for a few months now, communicating with card users through social media, website and statements as examples.”

Computerworld Australia has contacted National Australia Bank (NAB), ANZ Banking Group and Westpac for comment.

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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Tags PIN codesdebit cardsRMIT Universitycredit cardsCredit card fraudCommonwealth Bank of AustraliaPINWisesignatureME Bank

More about Andrew Corporation (Australia)Commonwealth Bank of AustraliaCommonwealth Bank of AustraliaCommonwealth Bank of AustraliaME BankNABNational Australia BankRMITRMIT UniversityWestpacWestpac

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