PIN-less credit card technology looks here to stay.
Recently we were contacted by a member who was unhappy her Visa card had been accepted in McDonald's without her PIN being entered. This was the result of a new system called Express Payment Service (or Quick Payment Service under MasterCard) which operates with all Visa and MasterCards.
Now credit card payment systems are about to take the next step as a similar PIN-less technology, already used by over 5.3 million Aussies, is about to take off here with the advent of a new type of card.
MasterCard is launching its new PayPass “contactless” payment system. For purchases under $80 you’re no longer required to enter a PIN or a signature, you can just tap your card on the reader and go. This will certainly speed up transactions, but it raises the question of whether it increases your vulnerability to fraud.
Card security
Albert Naffah, MasterCard New Zealand's country manager, says that PayPass will make transactions more secure because in “contactless” payments your card doesn’t leave your hand. So there’s less opportunity for a third party to "skim" your card or steal your details.
The embedded chip and antenna inside these cards operates on a remote frequency, so it must be extremely close to the reader to make the sale – making it impossible for payment details to be "sucked" from your card at a distance. Also, each transaction has its own "fingerprint" so it can be tracked.
You’re still responsible for reporting a stolen or missing card as soon as possible so it can be cancelled in the same way as your regular MasterCard card. But as long as you have done everything required to protect yourself against fraud, you will be covered for the costs of any unauthorised transactions by MasterCard's "zero liability" protection policy. Check your financial institution’s terms and conditions to make sure you understand what this involves.
Here to stay
It won’t be long before you’re skipping through queues with PayPass. MasterCard is aiming for all its new cards and selected merchants to have PayPass functionality by October 2012, and all existing cards and merchants to adopt the technology by April 2014. Taxis, newsagents, supermarkets, service stations, cafes, bars and cinemas must all be PayPass enabled by this date.
Whether “tap and go” cards live up to their claims of high security is yet to be seen, but their rapid uptake overseas suggests they're here to stay.
More from consumer.org.nz
- McDonald's credit card payments - the complaint from our member about McDonald's express payment system
- Tap and Go at the Rugby World Cup - blog about prepaid MasterCards
- Credit cards - compare cards and rates with our credit card selector
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I've noticed that there are more and more requirements on card holders to protect against fraud. For example, Kiwibank terms and conditions require virus protection on your computer, you not to leave your wallet in the car and not to use the same pin number on different cards. These things are all sensible steps but as the number of requirements grows the risk of inadvertently failing to do one of these things also grows. Tap-and-go will make CC fraud MUCH easier and sometimes that's going to come back to the consumer. Not allow us to opt out of that increased risk seems unreasonable.
I have a Westpac Mastercard, and the same thing happened to me as Lisa Floyd. I was puzzled as to why I wasn't required to enter my PIN when making purchases.
I contacted Westpac twice, and they couldn't seem to figure out the problem. Seems they don't even know what they have set up regarding credit card transactions. Not knowing what's going on though is par for the course with W/pac, but the whole set up seems ridiculous. How can my credit card be secure when just anyone can take it and use it?
It is less secure because they no longer need to skim it, copy a signature or anything. Just pick a pocket steal the card and walk down the high street buying whatever they want for under $80. They could easily rack up thousands of dollars before the owner realises.
If they don't allow me to have a card WITHOUT this new swipe functionality I will be cancelling my credit card.
In London it's the Oyster card.
In Hong Kong it's the Octopus card. The HK system is possibly most advanced. It is, just like the Oyster system, a debit card. - It is in use everywhere from transport to supermarkets, convenience stores and vending machines. The RFID chip is embedded in cards (similar to credit cards), watches, mobile phones. It is quick, easy and safe as long as one doesn't lose the card. If the card is lost, a quick phone call will have the card blocked.