He then tried another online retailer with a smaller transaction, and again noticed that the balance didn't change. Hughes then put through a transaction for an amount larger than the remaining balance on his prezzy card, and was surprised to discover that the purchase was authorised by the online retailer.
Since the Prezzy cards can be purchased anonymously at any NZ Post branch, Hughes says the scope for abuse is obvious. Anyone can buy a card, make online purchases over and above the amount deposited, leaving the retailer to carry the can.
NZ Post's general manager for payment services, Terese Tunnicliffe, says that this is indeed what will happen: "The retailer is accepting the risk that the purchaser does have sufficient funds for the transaction and is not committing fraud - or making a genuine mistake about the amount of funds available," she says.
Tunnicliffe explains that the case quoted to her by Computerworldindicates that the retailer was not authorising the transactions in real time, or immediately. The retailer is enabling transactions to be completed without consistently confirming that there are sufficient funds available on the Prezzy card being used, she says.
To avoid having transactions charged-back to them, NZ Post encourages all retailers who want to accept payment cards for online purchases to seek approval on all transactions immediately. However, Tunnicliffe adds that the choice of doing ultimately lies with the retailer.
New Zealand Prezzy cards can have up to $500 deposited on them with a mininum of $25 required, and cost $5 to buy. They cannot be re-charged once the initial deposit runs out.