Signing off: Credit card giant ditches pens for PINs
Visa is abandoning signatures in favour of PINs in a bid to boost credit card security. Photo: Justin McManus
The days of signing your name to verify your identity when shopping with a credit card could be numbered, with credit giant Visa deciding to phase out pens in favour of PINs.
From April 1, 2013, all Visa card transactions will be approved by customers using personal identification numbers instead of signatures.
The move is expected to reduce signature-based credit card fraud which has been on the rise over the last two years - from 38 out of 100,000 transactions in 2010 to 52 out of 100,000 transactions in 2011.
Visa spokeswoman Judy Shaw said the change was part of a comprehensive security plan to phase out the use of signatures in favour of PIN and card chips, which are already widely used by customers in stores and ATMs.
"At the moment we're working with financial institutions and other card schemes to discuss a uniform approach to chip and PIN use across the industry," she said.
"It will include a communication program so that cardholders are aware of their PINs and know how to use them," she said.
But rival American Express will still allow customers to confirm purchases with signatures although cards are issued with chips.
‘‘We’re giving our members both options as we understand that every person has their own preferred way of using their credit card at the point of purchase," said a spokeswoman for the company. The spokeswoman noted that American Express has one of the lowest instances of fraud in the industry.
MasterCard has been contacted for comment.
The change by Visa will also affect 14,000 cafes and restaurants, where customers will no longer be able to sign their bills at the table.
"Right now you're used to putting your credit card into the black folder and then expecting the waiter to take it and process it," said Garry Duursma, vice president at eftpos services company Tyro.
"By the time this mandate comes in, you're going to have to get up and go to the cashier and make the payment or the cashier armed with a payment terminal has to come to you."
Australia's banking and payments industry is expanding the choice in payments methods, as customers embrace more digital banking options. At the same time, banks are racing to upgrade their processing abilities, while working to ensure the overall security of the system. Australian Payments Clearing Association showed that fraud losses reached a record $278 million in 2011.
Mr Duursma said abandoning signatures will reduce the incidence of card-based fraud, although it could potentially open a new risk if the restaurant's eftpos system isn't properly integrated with the restaurant's bank account system.
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