Credit card payment system to change from June

Customers will be able to authorise credit card purchases using a PIN instead of the traditional signature from June under changes to be implemented by major card issuers.

From 4 June, consumers using one of the 600,000 point of sale payment terminals located around Australia will have the option of entering a PIN or signing when they make a credit card purchase with an American Express, MasterCard, Visa or Diners Club credit card.

Under the new system, after the shopper swipes their card and selects credit, they will then be asked if they want to enter their PIN. If they elect to do so, they then press OK to authorise; if they do not, they will press OK and sign a voucher as usual.

The change will mean faster transaction speeds – up to five seconds quicker for most retailers – and less paper shuffling because of a drop in the number of signed credit card vouchers.

The vast majority of retailers will not need any change to their POS terminal hardware to shift to the new system, according to Simon Grieg, project manager of the “Pen or PIN” changeover project.

“Most shops don’t need to do anything. The banks are able to download the updated software directly to POS devices, and in fact many already have the capability,” Grieg says.

Grieg says a “negligible” number of retailers will need new POS terminal hardware, but says he is not able to confirm whether or not those retailers will have to pay to do so.

“Those retailers will be contacted by their banks. It is something for the banks if there is any additional cost but it is unlikely; most of the machines are rented and under those agreements the banks are responsible for maintenance,” Grieg says.

PIN based credit card payment authorisation has already been introduced in many other countries around the world, including Britain and New Zealand.

The move to a PIN-based system as been credited with cutting in-store fraud levels in Britain, forcing fraudsters to shift their attention online.

Chris Harrison, chief executive of the Australian Payments Clearing Association, says there are both efficiency and security benefits to the new system.

“We think it is a sensible development and we’re happy to see the industry’s existing familiarity with PIN technology in debit cards being used in this extended way,” Harrison says.

More information for retailers on the change to PIN payment for credit card can be found at the Pen or PIN website.