Kiwi banks could chip in ahead of Aussies

New Zealand consumers could gain access to microchip-equipped debit and credit cards faster than their Australian counterparts.

New Zealand consumers could gain access to microchip-equipped debit and credit cards faster than their Australian counterparts.

Four of this country’s major banks already share a common Eftpos infrastucture, while those across the Tasman are still considering how they might collaborate and fund the estimated $A1 billion cost of the move to the more secure card platform.

National, BNZ, ASB and Westpac all use the common network of Paymark, formerly ETSL, and are equal shareholders in the company.

“It makes sense to use the existing structure for a chip card move,” says Darryl Roots, business development manager at Paymark.

So from funding and technical co-operation points of view, an earlier move than Australian is possible, but that depends on when each bank will see value in the move, Roots says. He agrees, however, that once one bank moves the others are likely to follow in the very short term, for competitive reasons.

The other major bank, the ANZ, stands outside the Paymark arrangement and is the sole owner of the other major Eftpos network company Eftpos NZ. The ANZ is the furthest ahead with chip-equipped cards, having launched its Zed card chip credit card last year (ANZ launches chip credit card). Fisher & Paykel Finance, the finance subsidiary of the whiteware manufacturer, has also entered the game (Second chip card to be released).

ANZ is naturally financing the development of its chip cards separately, but all chip-card terminals are likely to work to a common standard, known as EMV after the Eurocard, MasterCard and Visa credit card companies that developed it.

The Zed card has not been enthusiastically adopted, and is due for a relaunch.

A large driver behind adoption of chip cards, and Australian worries over whether their separately operating banks can get it together in time, is a change to the burden of responsibility for fraudulent transactions, signalled by Visa for 2006.

By that date it expects chip card terminals will be in wide use, offering greater security against fraud, as chip cards require a PIN to be entered at transaction time to identify the customer as the legitimate owner of the card.

Beyond 2006, if a merchant has a non-chip card terminal and a chip-card is used in it fraudulently, the responsibility will belong — at least in theory — to the “acquiring bank”, meaning the merchant’s bank and not the bank that issued the card.

In practice, in many cases, the cost of fraud today is visited on the merchant, but this will become less so as chip cards are more widely used.

Visa’s Sydney-based head of chip cards for Australia and New Zealand, Vipin Kalra, says it is imperative that Australian banks find some way of working together if they are to minimise the cost of the transition to smartcards.

“I personally think it’s going to be very expensive. The Australian Eftpos network is probably one of the most expensive networks and it shouldn’t have been like that,” Kalra says. He agrees that the ETSL system could give us an easier road in New Zealand.

“The ETSL model is the right model for New Zealand, and it’s probably the right model for Australia too.”

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