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Chip, PIN, payWave and PayPass: everything you need to know and more

From swipe to tap…scribble to PIN, the way Aussie consumers pay for their goods is a-changin’. Most new credit and debit cards in Australia now come with the contactless (or tap) payment option and the decades-old credit card signature will soon be a thing of the past.

Wondering how the changes will affect your trip to the shops or the way you tip at a restaurant? Here’s a quick rundown on the changes to your plastic:

RIP credit card signatures

Avid pen-users prepare yourself! From 1 August 2014 MasterCard, Visa and AMEX transactions will no longer have the signature option, a move designed to help combat fraudulent transactions.

If you haven’t already, you will be required to select a 4-digit PIN over the phone, through Internet banking or in branch. Keep in mind, you may still have to sign for some purchases if you’re jet-setting overseas.

How do I tip at a restaurant?

Once the changes come into effect you will no longer be able to tip with a signature, instead you have the option to tip with a PIN. How it works is the staff member (who obviously provided great customer service) will enter the bill amount into the terminal and you will then enter the tip amount and authorise the total payment amount by entering your PIN.

The birth of contactless cards

For anything under $100, you also have the option to make contactless (or tap) purchases with all new Visa payWave and MasterCard PayPass credit cards that come with an embedded computer chip and radio frequency antenna. AMEX has also released a contactless card option (dubbed Contactless) for checkout readers with an American Express logo. If there is no logo you’ll have to revert to the ‘traditional’ method of swiping or inserting it into the terminal.

How does it work?

The payWave and PayPass tech sounds a bit complex but to put it simply (or try to) the embedded radio antenna transmits your card information wirelessly to the reader. All you have to do is hover your card within 4cm of the reader (Visa payWave) or tap the reader with your card (MasterCard PayPass) and you’re ready to go – no need to sign or enter a PIN.

A quirky MasterCard PayPass feature is paying by tapping the reader with the wallet your card is in. Keep in mind, if you have more than one PayPass card in your wallet, make sure you remove the specific card you’re going to pay with.
For more information on how the contactless (or tap) feature works check out Mozo’s payWave and PayPass guide here.

How secure are contactless payments?

You might be thinking, “what about transactions going through twice?”. To prevent transaction mishaps, the checkout reader creates a unique authentication code that only allows one transaction at a time. Plus, the card never leaves your hand, so you’re in total control and won’t run the risk of leaving your plastic at the counter. The technology also has secure encryption technology to protect you against skimming – when a crook uses a small device to scan your credit or debit card in your bag or wallet.

While your card could still be stolen, most credit cards provide a zero liability policy for fraudulent transactions with 100% reimbursement. Make sure you contact your financial institution as soon as you realise your card is missing, as some providers insist on immediate notification in order to get your cash back.

Can I disable the feature?

Unfortunately (to the dismay of many) there is no way to disable the payWave and PayPass contactless or tap feature on your credit or debit card. However, the MasterCard PayPass NFC-enabled mobile phone (currently in testing) will allow you to turn it on or off. 

It will be interesting to see what the next steps in contactless payment technology are, especially with tech-forward announcements like wristband payments and the Coles PayTags. We will have to wait and see…

Do you love or hate the changes to your plastic? Let us know below!

Mozo Editorial
Mozo Editorial

Mozo’s team of experienced journalists and money experts provide news, insights, practical guides and expert analysis to help you master your personal finances. We follow editorial guidelines that focus on accuracy, reliability and timeliness; helping you make informed financial decisions with confidence and the most of your hard-earned money.