'We understand the police have been frustrated around this, but the reality is the world is moving forward': Australian Bankers Association chief executive Steven Munchenberg. Photo: Eddie Jim
The big banks, worried about a consumer backlash, have stared down the top police who suggested tap-and-go technology is fuelling a new wave of thefts aimed at stealing cards.
Bank executives sat down with senior police officers from around the country at a two-hour meeting of the "fraud in banking" group, chaired by Stuart Woodwood of the Commonwealth Bank of Australia on Tuesday.
The banks complained that Victoria Police Commissioner Ken Lay jumped to conclusions when he said last week police are seeing "many, many thefts of motor cars, thefts of handbags, burglaries where people are looking for these cards" and "the banks are simply not doing enough to rein in the illegal use of the tap-and-go cards".
The banks, along with credit card companies Visa and MasterCard, say the concerns raised by Mr Lay have never been raised with them directly. The big four banks held separate meetings with Visa and MasterCard on Wednesday on the issue.
One source within a big-four bank said that in Victoria, police annoyance is higher because they feel compelled to investigate every customer who reports a stolen card. In other states, limited police resources are not tied up until card fraud exceed $500.
The "fraud in banking" group resolved this week to create a sub-group that will develop a template for bank reporting to police on contactless fraud across the country, including at what limit a card fraud should be flagged with the authorities.
In one of the main banks internal fraud teams approach police when they identify a new type of fraud or if they know who the offender is. But notification processes are not standardised across banks.
The potential cost to banks of rising crime linked to tap-and-go cards was highlighted by Peter Swan, an economist from the Australian School of Business at UNSW. He suggested banks could be liable for customers injured or killed when thieves targeted the lower-security cards, which don't require PIN numbers for transactions of up to $100.
"If [former prime minister Kevin] Rudd is in trouble for the four deaths and 200 house fires induced by his insulation scheme, then banks may also be in trouble if customers die during violent robberies designed to steal cards," said Mr Swan, who chairs the school of banking and finance at UNSW.
"It seems to me that foregoing identification is a mistaken policy. If essential, then why not restrict to just one transaction under $100 prior to providing identification?"
Australian Bankers Association chief executive Steven Münchenberg said the banks shouldn't have to pay for police responding to crime.
"The police aren't having to deal with a lot of armed robbery in bank branches because technology and security has considerably reduced the incidents of [that crime] – there are quid pro quos here. The reality is, taxpayers will pay for the security that the police force brings, and the fact the nature of crime changes over of time is a reality the police force is capable of dealing with.
"We understand the police have been frustrated around this, but the reality is the world is moving forward with new technologies and criminals will find new ways to do what they have always tried to do, which is rob people."
Police around the country have differing views on the effect the cards are having on burglaries. The NSW Police said it had "not seen a spike in credit card related fraud since the advent of contactless payment technology".
On the same day Mr Lay made his remarks, Victoria Police's head of fraud, Pat Boyle, was at a meeting in Singapore with all the banks, put on by Visa, that discussed card security. Mr Boyle said on Thursday he would review evidence uncovered by the "fraud in banking" group ahead of the commissioner's next quarterly statement on crime statistics, but this required the banks to provide frank data.
"We really need to build up trust and I need to build up knowledge, so I am confident I have the right information when I brief people. We want accurate information," Mr Boyle said.
The Australian Payments Clearing Association, which established the "fraud in banking" group which meets quarterly, collects figures on card fraud. These show the number of fraudulent transactions doubled between the 2012 and 2013 financial years. However, the data does not show fraud levels from tap-and-go cards specifically.
The banks and card companies hold their own figures but they have not been aggregated and publicly released.
One of the major banks said on Thursday it had 30 per cent more contactless cards in the market compared with a year ago but card fraud was flat.
Another bank said only 5 per cent of all its card frauds is coming from contactless. Visa said there had been no increase in the rate of fraud as a result of the introduction of tap and go technology. Nevertheless, Mr Münchenberg said the banking industry needed to think harder about the impact of introducing new technologies. "We tend to think of them as more efficient banking services, but sometimes there are other issues that need to be managed as well, including concerns about security.
"Change can throw up unexpected concerns and valid or not we need to think about how we manage them."