BNZ gets smart with cards

The Bank of New Zealand says it will become the first bank to start issuing smart credit cards on a large scale in the next fortnight, when it will begin to issue Visa cards with embedded microchips.

The new technology, designed to help combat credit-card fraud, will inconvenience the few customers who prefer to sign for purchases.

That will no longer be an option. Customers without a PIN will need to visit a bank to have one loaded to their card.

In addition to replacing magnetic-stripe cards as they expire, the BNZ will issue a further 7500 chip cards each week to accelerate the change. It will start to replace its MasterCard credit cards from January.

The ANZ Bank has announced it intends to begin the mass adoption of chip cards this year, but BNZ retail director Chris Bayliss says the BNZ is first off the block.

Banks around the world are moving to chip cards and will eventually phase out magnetic stripes, which can be skimmed by fraudsters using reading devices hidden in ATMs and eftpos terminals and used to create fakes.

For the time being, the BNZ's chip cards will have magnetic stripes, as well as chips, so they can be read by older terminals.

Mr Bayliss says the switch should still reduce fraud and will make life easier for customers who travel overseas.

"It is now a big inconvenience travelling through Europe and Asia and not having a chip card.

"You get looked at sideways. They don't know what to do. They don't have the old readers any more and you are made to feel awful."

He would not say whether the bank intended to use the greater capability of chip cards to support new applications, such as electronic purses, retailer-run loyalty schemes or cards that could double as public-transport smart cards.