Visa upgrading to 'dip-the-chip' security

Photo / Dean Purcell

The way you swipe your Visa card is about to change as the company begins a major upgrade on 2.6 million cards throughout the country in a bid to crack down on fraud.

All New Zealand Visa cards issued from April 1 will need a Pin number and will be swiped differently in a process nicknamed the "dip the chip".

Visa customers are about to be sent letters informing them of the changes, which 4 per cent of Visa customers are already using.

At present, magnetic strips on the back of the card are swiped to complete transactions but these are about to be replaced with a microchip.

Visa's New Zealand manager, Sean Preston, said the company was making the changes after a rise in card fraud.

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

"While card fraud in New Zealand remains low by world standards, overseas criminals are becoming increasingly active in seeking out new arenas.

"The time is right to take advantage of the new technologies available to work across the industry, with banks and merchants, to strengthen security across the board."

Mr Preston said the chip technology meant transactions would be processed faster.

Chip cards used with personal identification (Pin) numbers had reduced counterfeit card fraud in the United Kingdom by 35 per cent between 2005 and 2008, he said.

In Malaysia, where chip technology was rolled out in 2005, domestic counterfeit fraud on Malaysian-issued Visa cards was virtually eliminated within 12 months.

Overseas-issued magnetic stripe cards with signatures and overseas chip cards without Pins will continue to be accepted.

All Visa cards must be upgraded by April 1, 2014.

Information technology security expert and forensic investigator Daniel Ayers, whose Visa card was replaced in November after a fraud at Auckland City Council's Downtown car park, said the upgrade to chip cards was a "significant improvement" on security.

"The fact that they've decided to do that is a very good thing."

Mr Ayers said chip cards were much harder to duplicate because the data held on them was encrypted.

With magnetic strips, criminals could buy a machine that copied the information on to copycat cards.

It is believed that thieves copied data by hacking either the Downtown car park's automatic payment machine or a council computer system which contained the credit card information from anyone using the machine.