Visa to roll out chip and PIN technology for New Zealand

Signatures will be phased out as part of a seven-point strategy to crackdown on card fraud

 

Visa has announced it will move to chip and PIN technology for all New Zealand Visa cards over the next four years, with signatures no longer accepted at the checkout from 2012, as part of a wide-ranging agenda to cut card fraud.

Visa’s Country Manager for New Zealand, Sean Preston, said Visa was working with financial institutions and retailers to upgrade more than 2.6 million Visa cards in New Zealand[1] and thousands of merchant point of sale terminals and ATMs to chip and PIN technology.

“From April 2010, all new Visa credit cards issued in New Zealand will feature secure embedded smart chips to give New Zealanders a higher level of confidence in the security of their transactions,” Mr Preston said. “This will be followed by the upgrade of Visa debit and reloadable prepaid cards from April 2012,” he added.

“Chip technology will also offer banks and merchants the ability to provide their customers with benefits such as faster transactions, innovations such as contactless payments and the opportunity to store information such as reward programs on their cards.”

Mr Preston said the move to chip and PIN was part of a comprehensive seven-point security agenda that also includes initiatives to enhance the security of online transactions.  Cardholders will be enabled to use a Verified by Visa password when shopping over the internet.  Online retailers will be required to capture the three-digit cardholder verification number when processing transactions, while small and medium sized businesses will be required to enhance their levels of data security.

“These initiatives are part of a comprehensive security upgrade aimed at providing cardholders with a higher level of confidence and significantly reducing all types of card fraud including counterfeit, skimming and online fraud,” Mr Preston said.

“While card fraud in remains low by world standards, overseas criminals are becoming increasingly active in seeking out new arenas. The time is right to take advantage of the new technologies available to work across the industry, with banks and merchants, to strengthen security across the board. However, non-New Zealand issued magnetic stripe cards will continue to be accepted with signatures as will overseas chip cards without PINs,” Mr Preston said.

Visa has been consulting with financial institutions and merchants to agree on the following actions and timelines:

·         Moving to 100 percent chip card issuance.  By 1 April 2010, banks and other financial institutions must issue all new Visa credit cards on chip; by 1 April 2012 all new Visa debit and reloadable prepaid cards must be on chip; and by 1 April 2014, 100 percent of all Visa cards must be on chip. 

·         Ensuring all merchant acceptance terminals must be chip capable and activated by 1 July 2011.

·         Ensuring all new Automated Teller Machines (ATMs) commissioned must be chip capable by 1 April 2011. 

·         Introducing a broad rollout of PIN (Personal Identification Number) verification for all domestic transactions, with signatures no longer accepted from 1 April 2012.

·         Issuers must enrol all Visa cards for Verified by Visa, a free service for cardholders that provides a password for secure online shopping, by 1 April 2012.

·         All merchants who take online, telephone and mail order transactions must check the three-digit card verification code (known as CVV2) from 1 April 2012.

·         Small and medium sized (Level 4) merchants will be required to implement higher levels of data security.  Acquiring banks will be required to provide Visa with a program for their merchants to comply with the Payment Card Industry Data Security Standard (PCI DSS) by 30 April 2010 that includes a strategy for risk profiling, merchant education and compliance reporting twice per year.

Currently about four percent of Visa cards issued in New Zealand are chip-enabled[2].  Chip cards used with PINs have proven to be effective in reducing counterfeit card fraud overseas. The UK introduced compulsory chip and PIN in 2006, resulting in fraud losses at UK retailers falling by 35 percent between 2005 and 2008[3].  In Malaysia, chip technology was mandated in 2005 and resulted in domestic counterfeit fraud on Malaysian-issued Visa cards being virtually eliminated within 12 months[4].

Mr Preston said that recent fraud trends have highlighted Card Not Present (CNP) fraud as an area of concern.  “Initiatives such as CVV2 and Verified by Visa will focus on online security and empower cardholders to play a more active role in protecting their information.”

In addition to its multiple layers of security, Visa offers purchase protection across all of its credit, debit and prepaid cards issued in New Zealand under its Zero Liability policy. Under this policy, Visa cardholders are not held liable for unauthorised transactions whether they are conducted online, in person or over the phone[5].