Visa to chop old-style credit cards

Visa will move to chip cards for all its credit cards from next month, with the days of signing for purchases to end in 2012.

Visa's country manager Sean Preston said all 2.6 million Visa credit cards issued in New Zealand with a magnetic swipe strip will be replaced with the more secure chip cards within four years.

Using a PIN number to verify transaction will be mandatory from April 2012 including for cards with magnetic strips. About a third of customers still sign for credit card transactions.

The changes follow a 20 per cent increase in credit card fraud in recent years, particularly in internet transactions.

Retailers will have until July next year to upgrade to chip-capable payment terminals, in time for the start of the Rugby World Cup.

About 80 per cent of terminals are already able to take chip cards.

The new cards will also allow for faster transactions including contactless payments for small purchases, and will be able to store additional such as loyalty scheme details, Mr Preston said.

To improve the security of using a credit card to make purchases online, retailers will be required to collect a three digit verification number printed on the back of all cards, in addition to the account number and expiry date.

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

In Britain the introduction of chip cards in 2006 reduced fraud losses by 35 per cent within two years.

- © Fairfax NZ News