Financial News: No More Signing

Financial News: No More SigningNew financial changes will affect the way people make payments by credit and debit cards. While signatures were once essential for credit card payments, by 1 August 2014, PINs will be mandatory for most transactions. These changes are aimed at making credit card payments more secure and convenient.

Changes introduced for more security

The changes have been introduced by the Industry Security Initiative, which is a collective of major financial institutions and card schemes in Australia. A PIN transaction is considered to be safer than a signature-based transaction, because your signature can be easily forged in the event that your credit card is stolen.

It has been estimated that there’s only a 1 in 10,000 chance that someone can correctly guess your PIN. Using a PIN means quicker transactions that eliminate the need for signing and verifying of signatures. PINs are difficult to steal; however, there is still the possibility of fraud if the PIN is written down and stored in a wallet with the credit card.

When you must use a PIN

The new PIN practice applies to over-the-counter transactions that use a credit or debit card with an embedded smart chip. Transactions that involve cards with magnetic strips will still require signature authorisation.

Exceptions

The only exceptions to the PIN rule are low-value transactions such as those under $35, contactless transactions less than $100 in value (such as payWave or PayPass), Internet shopping transactions and phone purchases. These transactions can be conducted without a PIN.

Travelling overseas

Australians travelling overseas might find that the PINs don’t work in some countries. In these circumstances, travellers might need to sign to authorise the transaction. Additionally, cards that use six-digit PINs instead of the standard four-digit PINs may not work in certain terminals.

Overseas cards without PINs

Tourists and travellers from overseas might still bring signature-only cards. Some terminals will probably require a PIN to be used; in this event some tourists may need to be offered alternative payment options if they don’t have a PIN-enabled credit or debit card.

Cards without an assigned PIN

While many – if not most – users have switched to using a PIN with their credit and debit cards, there are some users who do have not PINs assigned to their cards. If your credit or debit card doesn’t have an assigned PIN, contact your financial institution to arrange for a PIN to be assigned immediately.

Safety considerations

If you’re using signatures for your debit and credit cards, contact your financial institution for a PIN well before 1 August 2014. For better security, avoid writing down your PIN numbers and disclosing them to anyone. Memorise your PINs, and choose a PIN that isn’t easy to guess.