Signatures abolished – it all makes dollars and sense

Changes will be made to the way we use our credit cards from early next year. Jost Stollmann explains what is in store for those who believe plastic is fantastic.

Australian retailers will need more than the luck of the Irish next St Patrick’s Day as it has been revealed that, Monday the 17th March 2014 will be the date that credit and debit card transactions will need to be accompanied with a PIN in order to be verified.

For generations consumers have signed on a receipt when paying with their payment card. However, this will change as revealed by Visa in a submission to the ACCC.

From March next year all domestic Visa transactions will be verified by PIN or declined and it is expected that MasterCard will follow suit.

Tyro has submitted to the ACCC inquiry that it supports an expedient and coordinated Visa and MasterCard PIN mandate implementation.

Australia’s 14,000 cafes and restaurants, and the 145,000 staff who work in them, need to prepare themselves as there is danger to potentially alienate customers who will resent the inconvenience of leaving their guests and friends to pay for their bill.

From St Patrick’s Day 2014, Australian consumers will be forced to leave their seats and pay for their meals at the cashier using the four digit PIN code, or in a minority of cases the payment terminal will come to them at their table.

For 1 April 2013 Visa had originally announced that PIN would become mandatory and signature was not going to be accepted anymore for face-to-face transactions.

Tyro reacted to the announcement immediately by developing and deploying an integrated payment solution allowing consumers to pay using a mobile EFTPOS terminal.

We were ready, the other banks were not.

As a consequence Visa extended its original deadline to 17 March 2014.

Payment card fraud is booming in Australia, with the total number of fraudulent transactions surpassing one million last year.

Fraud losses added up to $261 million. When one adds to this the significant financial costs of issuing new cards, administrative burdens and personal inconvenience, using chip card technology and PIN entry becomes an attractive method to stamp out card theft and skimming and the share of fraud in face-to-face transactions.

The PIN requirement puts the consumer back in control, it is virtually impossible for a fraudster to ascertain a PIN, while forging a signature is easy.

However, the big question is what the change means to the 45 per cent of Australian Visa and MasterCard cardholders who currently do not use their PIN?

They have to learn. Except for contactless transactions below $100 and low value transactions below $35, domestic chip card transactions will be declined unless the valid PIN is entered into the EFTPOS terminal.

What is at stake is a multi-billion industry. Australians spend an astonishing $10 billion annually dining out at cafes and restaurants, and struggling retailers cannot afford to alienate customers.

Integrated mobile EFTPOS terminals are the solution

Whilst mobile terminals are nothing new, their adoption in restaurants has been lack lustre to say the least. Most restaurateurs have balked at handing the critical bill payment instance to often itinerant staff.

Having spotted the opportunity to innovate a new entrant into the electronic card payment space (Tyro) has worked closely with the industry and the key software providers to develop Australia’s first, all IP based, integrated “pay at table” solution.

How Tyro’s integrated EFTPOS terminals work

By integrating its advanced IP based wireless payment terminals with the restaurant management software, Tyro delivers the integration benefits of speed, accuracy and reduced fraud.

The solution actually establishes a conversation between the restaurant management software and the payment terminal and allows the consumers to use the device at their table at their own pace to split the bill, pay and tip using their soon mandatory four digit PIN.

The diners will also have a broader choice of cards. They will no longer be limited to today’s signature based credit cards, but will for the first time, also be able to use Australia’s popular eftpos debit card at the table.

Certainly restaurateurs will appreciate this as increase use of EFTPOS will save merchant service fees.

But most importantly, customers never lose sight of their credit cards as they do now, which means they have total security over them.

Current adopters of the solution have reported positive outcomes such as halving the number of trips a waiter makes to the table to close it off.

Restaurant managers also love the solution, because they no longer spend late, lonely nights, after staff have gone home, manually punching numbers into terminals, to process tips.

With Tyro’s integrated pay at table solution end-of-day reconciliation and tip completion becomes a mouse click affair.

The customer’s experience is vitally important creating good will and generating repeat business.

Wireless integrated pay at table EFTPOS, may be a small, but is an important step in the process of migrating all card payment transactions to the secure personal PIN entry.

So far from being a threat, the long expected change eliminating credit and debit card signatures could be the best thing to happen to Australian restaurants in many years.

Jost Stollmann is Executive Director and Chief Executive Officer of Tyro Payments. In 1984 he founded and grew the German system and network integrator CompuNet Computer AG into a one billion dollar company. In 1996, he sold it to GE Capital US and led the integration and expansion of GE Capital IT Solutions across Europe.  In 1998, as Federal Shadow Minister of Economy and Technology, Jost ran his successful election campaign making a significant contribution to the landslide victory of Gerhard Schröder to the Chancellorship of Germany. Jost commissioned an award winning 40m high performance racer-cruiser and sailed with his family around the globe before settling in Sydney in 2004.