Pre-paid credit cards to be the next big thing

Pre-paid credit cards could soon become more common than phone cards as providers scramble to meet demand for more flexible payment options.
In recent weeks, MasterCard and Visa have launched a raft of pre-paid cards, hoping to cash in on markets previously beyond their reach - such as children, students and adults who have a poor credit history. Pre-paid cards, which could eventually be available at local convenience stores, allow the user to shop online, over the telephone or in person using credit paid for with cash when the card is purchased.
Users load the card with their desired credit amount, typically less than $1000.
The cards don't require a bank account, and can be given away as a gift, or a kind of electronic pocket money to children, allowing purchases such as music downloads.
Already common in overseas markets - including the US, where they are popular among illegal immigrants unable to open bank accounts - pre-paid cards are relatively new to Australia.
But MasterCard and Visa believe there is growing, unmet demand as credit card-style transactions become increasingly necessary for purchases such as airline tickets, hotel bookings and online items.
Infochoice analyst Denis Orrock says pre-paid cards may also prove popular with shoppers concerned about online security.
"In Australia, they will fill a void for people who want to shop on the Net but aren't comfortable using their credit card," Orrock says.
"With a pre-paid card, you know what you're in for."
MasterCard has launched two pre-paid cards, the Westpac Gift Card, available with pre-paid amounts of between $15 and $800, and the Commonwealth Bank travellers cash card, an ATM card
that allows travellers to withdraw pre-paid cash in foreign currency.
Last month, Visa launched the ANZ Gift Card, following up on its Heritage Building Society card, released in May, and the Visa BoPo, its first general-purpose pre-paid card.
Last month also saw the release of Visa's CashXpress, allowing users to send money overseas, and the Universal Visa Gift Card.
Although they miss out on the interest charges that accrue on a credit balance, card providers make money from the sale of individual cards, which cost around $5 each.
They can also re-invest the prepayments until the money is spent, earning returns on the short-term money market.
Based on US experience, most card users take about three months to spend a balance.
As well, Denis Orrock says card providers can usually bank on small sums of a few dollars each remaining unspent at the card's expiry date, generally around six months after purchase.

Source: Sunday Telegrah

Twelve tips to protect yourself and your credit card from online fraud

Online banking fraud is on the rise and there are a number of ways you can protect your credit card and bank accounts if you transact over the internet:
1. Keep your computer secure and the access to it;
2. Don't send credit card or account details by e-mail;
3. Reject any email that asks you to follow a link to website and input account details for verification - even if the website looks authentic, its probably a fake replica
4. Make sure you log out of your online account when finished - especially at work, libraries and net cafes
5. Deal only with established and reputable merchants;
6. Only make payments to secure websites - look for the padlock symbol in the bottom-right of your browser and click for details
7. If using a new site, do business first in a small way;
8. Check your accounts and report discrepancies immediately;
9. Ignore the "remember my password option" on banking and shopping sites
10. Change your password regularly;
11. Cancel any card that has been used fraudulently;
12. Read a company's privacy policy before buying online

Credit card fraud on the rise in Australia

Credit cards are more than ever set to trumpet the title of "fantastic plastic" this Christmas on predictions of a sharp increase in usage and a parallel rise in card fraud.
Spending on cards will rise by close to 25 per cent over Christmas to top the $17 billion mark for the first time, according to research house Cannex.
The sheer scale of usage could generate headaches on repayments and increase the risk of theft or fraud, simply from greater exposure.
Members Equity Bank said yesterday it was encouraging members to be extra cautious when using cards.
MEB head of workplace business Tony Beck said: "Criminals are getting smarter and the incidence of fraud is increasing."
Cannex said the country's 13.1 million-plus credit cards will each swipe about $1280.
Encouraging the use of plastic are discount deals to win debt transfers from competing cards.
In the past six months, Cannex has found eight more cards offering to transfer balances at zero interest on existing debt, making a total of 15 to do so.
A "whopping" 73 more cards offer balance transfers at an interest rate on debt of less than 5 per cent, or better than half the usual rate. A total of 106 cards will offer such a rate.
Cannex reported that "lenders are lining up with their fishing nets ready to catch customers who have maxed-out over the festive season and are searching for an escape route".
To make spending easier, 21 cards were offering an interest rate of less than 10 per cent and 54 had rates under 13 per cent - eight of which did not charge an annual fee; a total of 28 cards were not charging an annual fee.
Cannex research analyst Garfield Wright said people spent up to 25 per cent more in December than they did for the other 11 months of the year.
"For the past three years, Australia's annual pattern of credit card usage has been predictable, with spending soaring in December as credit cards are well and truly given a workout," Mr Wright said.
January, however, was a different story as consumers came to terms with the credit card debt that needed to be paid off.
"There will be a completely different kind of New Year's resolution made this January."
The Australian Bankers Association reminded consumers yesterday that any debt on a card needed to be repaid.
But it said most borrowers did so, pointing to Reserve Bank of Australia figures for the past three Christmas periods that showed borrowers repaid 99.6 per cent of their debt over December and January.
Last Christmas was a good one, with RBA figures showing credit card holders made repayments that exceeded transactions by $638 million.
Source: The Australian, Tim Blue

Australians are spenders not savers

Most Australians lack a disciplined approach to saving money, but spending it is another matter, new figures show.
A survey conducted for online superannuation fund Max Super found that one in four of the 798 Australians surveyed kept nothing at all from their income to put towards their savings.
Only half of the respondents sometimes put part of their income towards their savings.
Max Super chief executive Andrew Barlow said many Australians were out for instant gratification and were willing to take on debt instead of saving for things in advance.
"This is great when you have years of income ahead of you, but may become an issue upon retirement," he said.
The survey found that three out of four respondents stated that over 50 per cent of their income went towards day to day living expenses.
Mr Barlow said it appeared many people were exhausting their pay packet on their household living costs and credit card bills instead of saving.
"It seems Australians feel confident spending their money, as the unemployment rate is at an all time low and property wealth has increased massively," he said.
The latest official figures show that unemployment fell to a 30-year low of 4.6 per cent in October, and combined with wages growth, the supportive economic conditions have encouraged Australians to spend and borrow more.
Retail spending continued to climb in October, rising 0.8 per cent to $18.372 billion, while credit card borrowings also continued to trend upwards with no sign abating.
In September, Australians had $37.176 billion on credit with credit limits surpassing a total $100 billion for the first time ever.
While the impact of the third interest rate hike for the year in November – which pushed the official rate up to 6.25 per cent – is still to be seen, borrowing for housing has continued to increase, although at a slower rate.
Reserve Bank of Australia figures showed that housing credit grew by 0.8 per cent in October to be up by 14 per cent over the year.
Mr Barlow said that while buying a home was a priority for most people, he said consumers should aim to put aside 10 per cent of their income towards their savings, and split it across both short-term and long-term investments.
"For instance, you might consider saving part in quick access investments for those emergencies in life, while salary sacrificing a component to your super to build up for needs later in life," he said.
Mr Barlow said it was unrealistic to expect people to budget down to the last cent or to deprive themselves of the odd luxury.
"However, what we do encourage is the concept of `paying yourself first' and taking good care of your finances now, for later," he said.
Source AAP

Credit card holders are being dealt a poor hand

Credit card users who miss an American Express credit card payment will be hit with higher interest rates.
In an Australian first, American Express is applying a form of risk-rating to its customer base that will result in a sliding scale of rates.
Miss one credit card minimum payment, and you lose any promotional rate you were enjoying.
Miss three payments within 12 months and your current rate increases by 4 per cent per annum.
Miss two consecutive payments, or four separate ones within 12 months, and your rate goes up to 25.99 per cent for at least the next 12 months. At the end of that time, Amex has discretion over whether it will lower your rate.
Effectively, the company is relegating those they assess as high-risk to a punitive rate. Or, in Amex's words, "we are setting credit card rates at the customer level rather than the traditional approach of setting rates by product".
This represents a departure from how credit card interest rates have been set in the past. Until recently, if you missed a payment on your credit card, the worst that could happen was you'd be hit with a flat fee. "We'll see the Australian market move to risk-based pricing over time," predicts Denis Orrock of InfoChoice. "Whether it be through a universal change to the reporting structure, to allow ratings agencies to carry it out, or institutions doing their own risk profiling.
"Consumer groups are concerned vulnerable consumers will be hardest hit by the change. Carolyn Bond of the Consumer Law Centre in Victoria says the new Amex policy goes against the industry trend to responsible lending."Amex is going in the direction of penalising people in financial difficulty, rather than looking at different ways they can assist," Bond says. "If you can't afford your payments at the standard credit card interest rates rate [typically about 17 or 18 per cent], then you're not going to be able to afford them at 26 per cent."Cardholders could be locked into a vicious circle of crippling debt with such high rates.
Defaults of 90 days or more affect a person's credit history. "You start to see real problems emerge," says Dr Nick Coates of the Australian Consumers Association. "Customers struggling to maintain everyday expenses with the [recent] interest rate rise and petrol prices will probably start to load up their credit cards first. We've seen cash-outs and credit card debt before the last rate rise at an all-time monthly high, suggesting there are a lot of people under stress. They're the sorts of consumers who will be caught by a sliding scale."Risk-based pricing is common practice in the US, where lending institutions are allowed considerably more access to credit records than they are in Australia.
"One of the reasons we haven't had more discriminatory rates for credit cards is because it's difficult to price risk at the outset," says Nicola Howell, the director of the Centre for Credit and Consumer Law at Griffith University. "That's one of the arguments for more detailed credit reporting."
Orrock says Amex is in effect conducting its own risk profiling. "What you're seeing is that Amex probably wants to cherry-pick their customer base by separating the good from the bad. This is a pretty easy way to roll your default risk customers up into a fairly aggressive interest rate for one year."
Nina Rinella, an Amex spokeswoman, says the company is simply trying to make sure its customers showing responsible payment behaviour are not subsidising irresponsible customers. "The vast majority of our customers have good payment behaviour, and they're not going to be [affected]," she says. Rinella says that Amex is simultaneously offering 60 per cent of its customers, who pay on time, a reduced rate that could be "as low as 12.99 per cent".
There are still some question marks over Amex's new policy.
The NSW Office of Fair Trading is considering the implications of the new policy under the consumer credit code, which imposes some restrictions on default charges.
The company says it is above board. "American Express sought the advice of several leading barristers who agreed that the policy complies with the consumer credit code," Rinella says."Any change in interest rate resulting from our policy is based on a review of the customer's account history ... [and is] made irrespective of whether the customer is in default at that particular time."
Prior to any interest rate changes we would have communicated to a customer multiple times through letters, statement messages, SMS alerts and/or phone calls," she says.
Coates also cites the Consumer Law Centre of Victoria's 2004 Unfair Fees report, which questioned the legality of excessively high default fees."I'm surprised that [Amex] is looking at this already," he says. "I would have thought that there are some issues to be resolved about so-called penalty fees and penalty rates in Australia before these sliding scales could be introduced." The report argued that if the penalty being charged is disproportionate to the actual administrative costs of default and is coupled with unconscionable contract provisions (such as unfair bargaining power), the fees could be illegal.
No one has challenged the banks in court on late fees yet. But there is evidence of a shift in policy in the United Kingdom, with its Office of Fair Trading recently outlawing sliding scale hikes by imposing a low, flat-rate limit on late fees for credit cards.
Andrew Willink of Cannex doubts that many Australian institutions will follow Amex's policy. He likens it to insurance, where customers who make few or no claims are rewarded with lower premiums (and vice versa). "It's a behaviour rate," he says. "If you behave in a regular pattern according to the contract, you'll benefit from the fact that your interest rate is lower."
But the system will introduce more complexity, he says."With finance products now, fees and interest rates are blurring together, so you don't know [the true cost] - and that's the difficult thing," he says.
Consumer groups are concerned the move may prompt other institutions to introduce similar rate hikes."We don't want to see this system being developed in Australia," Coates says. "We believe that it disadvantages struggling consumers who are over-committed with their debt."To avoid trouble, understand all your credit card terms and conditions."
Make sure you're very aware of what arrangements are in place if you do default," Howell says."Research of behavioural economics indicates that people always take a positive view of how they're going to behave.
They don't expect they're going to default, therefore they don't pay much attention to what the default arrangements are. So be realistic about your credit card use."

Source: The Melbourne Age

Credit Complaints on the rise

The chief credit industry complaint resolution service wants to make membership to it mandatory for lenders and brokers, following a rise in consumer complaints.

The number of complaints from consumers to the Credit Ombudsman Service (COS) jumped to 766 in 2005/06 from 685 in the previous year, a rise of about 11 per cent.

But most complaints, 526, were directed to non-members of COS. Complaints about COS members actually decreased significantly to 271 in 2005/06 from 397 in 2004/05.

This occurred as the number of contacts to COS rose sharply.

Chairman Graeme Matthews said the increased ratio of inquiries to complaints against its members was evidence of the increased effectiveness of its internal dispute resolution procedures.

Mr Matthews said 92 per cent of complaints received last year were resolved after facilitated negotiation or conciliation between the consumer and COS member.

Only 8 per cent of complaints required a determination by the Credit Ombudsman to resolve the dispute.

Mr Matthews said he is concerned about the growing number of complaints about non-members and called on state governments to make it mandatory for credit companies to join an external dispute resolution scheme like COS.

"Unless each participant is a member of COS or another external dispute resolution scheme, the consumer may be left without a remedy.

"This is clearly unacceptable as it hinders comprehensive coverage of the credit marketplace."
The vast majority of complaints to COS in 2005/06 were about standard loans (77 per cent).

About half of last year's complaints were about brokers and just over a third about lenders.
The biggest cause of complaints was a failure of a credit provider to disclose fees or commissions.

By the end of June 2006, COS had 6517 members, up from 5802 in the previous year.

Source: AAP

Is the National Australia Bank about to sell its credit card unit?

The National Australia Bank won’t comment on speculation it may sell its $3 billion credit card business, prompting analysts to ponder the merits of such a move.
But Geoff Driver, general manager of Australian Foundation Investment Company, said a "review" did not necessarily imply a sale.
He said it would be impossible to judge the merits of any prospective sale without seeing the detail of the propositions.
On the basis that a major bank like the NAB could not operate without offering credit cards, for growing its customer bases and up-selling and cross selling many feel that they would be really thinking about some distribution arrangement.
If a sale were to proceed an overseas player in the Australian banking sector would be the potential buyer, with Citibank, HSBC and GE as possible contenders.
NAB comes last in the big four Australian banks as an issuer of credit cards in Australia, and the credit card offers are ranked poorly compared with the Commonwealth bank and Westpac offerings.
Interestingly, Citigroup have set a goal to take NAB's place as the nation's fourth-largest issuer of credit cards. Competition for market share has driven card interest rates down, trimming the margin that made cards profitable.
Some cards are now available with interest rates as low as 8.99 per cent, well down on the rates of 16 to 18 per cent applying on almost all cards only a few years ago.

Victim nabs suspected thief of his credit card

A little bit of his own detective work and some luck helped a sharp-eyed victim of credit card fraud catch the man police say charged up a giant TV and several appliances on his stolen credit card.

As Joel Guimares, 25, drove by the Dunkin’ Donuts on Route 9 in Framingham yesterday on the way to work, he recognized the man he watched on a Target store security video recording using Joel's credit card to buy a flat-screen TV, convection oven, coffeemaker and other items.

“I was following the guy, and I was calling the police at the same time,” said Guimares, who lives in Framingham. “He ended up driving by the police headquarters, and they got him there.”

The suspect, Donald Larsen, 34, a manager at a Whole Foods Market, was charged with larceny of property worth more than $250 and credit card misuse.

Guimares got a call Monday from his credit card company about the possible misuse of his credit card. He had lost his wallet at the same Dunkin’ Donuts where he spotted the suspect.

The credit card company told him someone had spent about $2,000 at the Target on Route 30. Guimares said he went there and asked to see the security video recording.

He watched, but did not recognize the man buying the television.

But yesterday, while driving to his job at the Framingham Saab dealership, he recognized the face he saw.

Larsen drove away, Guimares followed and called the police with the license plate number, and Larsen was arrested.

Credit card fraud. What to do if you believe that you are a victim.

If you suspect at any time that you are he victim of credit card fraud, you need to take immediate action.
It's vital to call your card issuer immediately - all banks will have 24-hour emergency phone lines for this purpose - and explain what's happened and why you feel you have been defrauded.
Also inform the police as this could speed up refunds for any unauthorised use.
If someone else makes a purchase with your card before you inform your bank, the most you will be liable to pay is a token fee. The bank will wear the cost.
However, most banks may waive this fee.
On the otherhand, if you have acted negligently - for example, you've stored details of your PIN in the wallet holding your card - your bank may not refund the money.

Credit cards. Safe ways to withdraw cash from your card

Credit card owners must remain vigilant with ATM fraud.
Cash-machine fraud was down in 2005. However, the experts agree it's still a substantial problemas the fraudsters' techniques improving.
Typically a fraudster attaches a card reader to the outside of the slot into which you put your card - these devices can be hard to spot as they look like part of the machine.
This is a robbery that you never realise has taken place.
The details can lead to a new, fraudulent card with a fresh signature being made, which can then be maxed out to its limit.
Many fraudsters will now be out to get your PIN too, and they don't need to be standing looking over your shoulder to do this; they can rely instead on a pin-hole camera that records the PIN you enter on the keyboard.
Pin-hole cameras have a lens as small as a full stop.
If one of these is installed into a cash machine, it's unlikely you'll see it, but you may be able to see the card reader.
So, when approaching a machine that has other ones beside it, check if all the machines look the same.
What does a card reader look like?
One type of card reader is a flat, flexible piece of plastic that the fraudster will slot into the machine, coming back to pull it out and plug it into a computer.
The more common type is an external reader. The slot on the face of a machine that has one of these attached to it will be raised and possibly a different colour to the rest of the parts of the machine.
The external reader is glued on to the front of the slot and copies your card as it passes through. Most banks machines have smooth-fronted card slots, not raised, so this is a good indicator to look out for.
Also, be particularly wary if adjoining cash points have 'out-of-order' signs on them, as this can be a ploy to divert customers to the machine that has been tampered with.
This also goes for the out-of-order sign on the screen, as a criminal will break a machine that they cannot get a camera or card copier into to get you to use one that they have been able to crack into.
To get round pin-hole cameras it's also worth shielding the keyboard with your spare hand as you enter your PIN.
The safest methods of withdrawing cash with your credit card.
ATMs inside bank branches are very often a safer bet, but one of the safest ways to withdraw cash from your account is to get cashback at the supermarket. Many supermarkets are open 24 hours a day, and the best bit is that the card never leaves your sight.
But take note of what's happening around you, never share your account details with anyone and never let your card out of your sight.

Credit card smart. How to use your credit card safely

Nobody plans to be a victim of credit card fraud. But criminals have other ideas, so its important to be mindful of using best practices to minimise the chances of having your credit card account maxed out by others. In particular do the following.

1. Sign any new cards as soon as you receive them.
2. Use different PINs for different cards.
3. Memorise your PINs and do not write them down.
4. Never give anyone else your PIN details or any other account information.
5. Remember that your bank will NEVER request details of your PIN or whole passwords, by email or letter or over the phone.
6. Destroy copies of any receipts that detail your card details.
7. Regularly check your cards to ensure none have gone missing

Credit card Chip and PIN initiative cuts fraud in the UK

Nobody can deny that the Chip and PIN initiative has been worth it. According to the APACS, the UK payments association, UK card fraud losses fell by £65 million in 2005 to £439.4 million. Counterfeit fraud - where cards are either skimmed or cloned - fell by 25% to £96.8 million as the chip embedded in new cards offers a higher level of protection. Fraud on a card stolen before the genuine cardholder receives it (which is known as 'mail non-receipt') enjoyed an even sharper reduction in 2005, down by 45% to £40 million, as it has become more difficult for fraudsters to use stolen cards without the PIN.
These changes are long overdue. The UK had been reluctant to adopt Chip and PIN and had acquired the dubious title of 'Fraud Capital of the World'.
However, we can't afford to be complacent. Petrol giant Shell recently suspended Chip and PIN at 600 UK petrol stations after more than £1 million was siphoned from customers' cards. Criminals posing as technicians are thought to have hidden devices to capture PINs inside terminals. The information has then been used to create cloned cards which were used to withdraw the cash.
CNP fraud
Given how long Chip and PIN has been established in Europe, the fraudsters have had plenty of time to investigate alternative options. For example, while the headline figures from APACS are impressive, 'card-not-present' (CNP) fraud (where goods are purchased online, over the phone and by mail order) actually rose by £32.4 million - a rise of 21%.
CNP fraud is a difficult area to manage, as credit cards were never designed to be used in the way that they are being used today, with neither card nor the cardholder present.
So, despite the introduction of Chip and PIN, there are still many other sophisticated ways of getting hold of your credit card details currently being employed by the criminal fraternity. Likewise, there are also plenty of unsophisticated ways for fraudsters to obtain sufficient personal details to obtain credit in your name - for example, by stealing important documents like your passport or driving licence and rifling through your bins.
Online security
The next significant step in further protecting these non-face-to-face transactions will be to use Chip and PIN security for online transactions. This could, for example, involve customers using a Chip and PIN card inserted into a small handheld reader and tapping in their PIN to generate a one-off number to verify each transaction.
Meanwhile, customers must remain vigilant by ensuring that they keep all their account information secret, so that it does not fall into the wrong hands, and to alert their bank immediately if they suspect fraud. It's also worth ensuring your PC is protected with a firewall and antiviral software if you're shopping online.
ATM fraud
By the end of 2005, cash-machine fraud was also down by 12% to £65.8 million. However, the experts agree it's still a substantial problem throughout Europe. Not only are the fraudsters' techniques improving, but there are still many ATMs out there that can't recognise chips and so still rely on the magnetic strip on the back of your card.
The fraudster attaches a card reader to the outside of the slot into which you put your card - these devices can be hard to spot as they look like part of the machine. This is a robbery that you never realise has taken place. The details can lead to a new, fraudulent card with a fresh signature being made, which can then be maxed out to its limit. Many fraudsters will now be out to get your PIN too, and they don't need to be standing looking over your shoulder to do this; they can rely instead on a pin-hole camera that records the PIN you enter on the keyboard.
Pin-hole cameras have a lens as small as a full stop. If one of these is installed into a cash machine, it's unlikely you'll see it, but you may be able to see the card reader. So, when approaching a machine that has other ones beside it, check if all the machines look the same. This works best if you go to the bank that your account is with to withdraw cash, as all the machines for that bank should look the same. Look for any wires or cords coming out of the machine slot.
Card readers
One type of card reader is a flat, flexible piece of plastic that the fraudster will slot into the machine, coming back to pull it out and plug it into a computer. The more common type is an external reader. The slot on the face of a machine that has one of these attached to it will be raised and possibly a different colour to the rest of the parts of the machine. The external reader is glued on to the front of the slot and copies your card as it passes through. Most banks machines have smooth-fronted card slots, not raised, so this is a good indicator to look out for.
Also, be particularly wary if adjoining cash points have 'out-of-order' signs on them, as this can be a ploy to divert customers to the machine that has been tampered with. This also goes for the out-of-order sign on the screen, as a criminal will break a machine that they cannot get a camera or card copier into to get you to use one that they have been able to crack into. To get round pin-hole cameras it's also worth shielding the keyboard with your spare hand as you enter your PIN.
ATMs inside bank branches are very often a safer bet, but one of the safest ways to withdraw cash from your account is to get cashback at the supermarket. Many supermarkets are open 24 hours a day, and the best bit is that the card never leaves your sight. But take note of what's happening around you, never share your account details with anyone and never let your card out of your sight.
What to do if you suspect you are a victim of card fraud
It's vital to call your card issuer immediately - all banks will have 24-hour emergency phone lines for this purpose - and explain what's happened. Also inform the police as this could speed up refunds for any unauthorised use. If someone else makes a purchase with your card before you inform your bank, the most you will be liable to pay is £50. However, according to Cardwatch.org.uk, most banks and building societies will overlook this and refund the total amount. Do remember, however, that if you have acted negligently - for example, you've stored details of your PIN in the wallet holding your card - your bank may not refund the money.
How to use your card safely and securely
1. Sign any new cards as soon as you receive them.
2. Use different PINs for different cards.
3. Memorise your PINs and do not write them down.
4. Never give anyone else your PIN details or any other account information.
5. Remember that your bank will NEVER request details of your PIN or whole passwords.
6. Destroy copies of any receipts that detail your card details.
7. Regularly check your cards to ensure none have gone missing

Credit card signatures 'should be PINs'

Credit card signatures need to be replaced by a PIN system in Australia to protect against fraud, a parliamentary committee has found.

The House of Representatives economics' committee also wants EFTPOS cards that can be used for internet purchases - just like their credit card counterparts - and the introduction of chip technology.

It follows an inquiry by the committee into credit card changes in recent years, including the overhaul that has enabled merchants to charge customers a surcharge if they use a credit card.

The committee found Australia has fallen well behind other countries in terms of the safety mechanisms available to protect against credit card fraud.

It found in the not too distant future, Australian shoppers overseas may find they cannot use their credit cards because some countries are going towards PIN-identification, ditching the back-of-the-card signature altogether.

"While credit card fraud is comparatively low in Australia, this does not mean steps should not be taken to prevent it," it found.

"The committee considers that a move to PIN-based authorisation would be highly desirable in terms of fraud prevention."

There are also concerns that credit cards are more flexible for shoppers than low-cost EFTPOS cards.

Other countries have gone to systems that enable EFTPOS cards to be used online. In Australia, credit cards are effectively the only internet payment system.

The committee found there was no good reason why EFTPOS cards should not be enabled to let them be used for online shopping.

The advance of chip technology, which can protect cards even better than PIN numbers, was also backed by the committee.

The inquiry rejected claims by banks the reason they had not improved the safety features of credit cards was that they were getting less in so-called interchange fees from merchants.

"The committee does not accept this proposition," it found.

"In the US, technology is even further behind but interchange revenues are three times as high.

"Conversely, technology is more advanced in some debit systems where interchange fees are zero."
Source: AAP, Canberra Australia

New Home sales bounce back

Australia's housing market staged a comeback in the March quarter as home building activity jumped more than 10 per cent on the back of renewed interest in flats, units and townhouses, figures showed today.

The Australian Bureau of Statistics (ABS) said, on a seasonal basis, the number of new homes and units built were up 10.6 per cent to 39,219 for the quarter.
Over the year, home building was up 4 per cent.

The sharp spike in building activity followed falls in the previous two quarters and occurred ahead of the Reserve Bank of Australia's decision to raise interest rates in May.

The ABS said new private sector housing rose 3.9 per cent to 25,738 for the three months to the end of March.

New private sector other residential building climbed 26.3 per cent to 12,048.

Economists had expected dwelling commencements to have fallen in the March quarter in the aftermath of first quarter gross domestic product (GDP) data.

Commonwealth Bank chief economist Michael Blythe said the strong result indicated the recent slowdown in housing over the last 18 months was shaping up to be one of the mildest on record.

"It's not to say there is another housing boom under way but the housing side of things will not be a huge drag on the economy in the next year," he said.

Malaysia fighting online credit card fraud

Although the usage of electronic payment in Malaysia is still low compared with developed countries, it is nonetheless a “fast mover” when responding to online fraud, MasterCard International vice-president for operations and advanced payment products (South-East Asia) David Chan said.

He said Malaysia was among the first countries in the world to migrate to EMV (Europay-MasterCard-Visa) cards in an effort to combat credit card fraud.

“Realising that online fraud can cause huge losses, banks in Malaysia are moving fast to equip themselves with more secure anti-fraud codes and devices.

“The rate of adoption by local banks is fast, judging from its size if compared with developed countries,” he told StarBiz after presenting his paper entitled “Banking Technologies and Cost Effectiveness: Migration to Electronic Payment” yesterday.

He added that online authentication was essential for sustaining continued online payments and banking growth.

Chan said online payments globally currently accounted about 10% of the total US$5tril plus e-payments business. He attributed this enormous figure to the rising e-commerce business worldwide.

He said although online fraud was 20 times higher than total card fraud in the US, nevertheless it had declined with the usage of more secure online fraud codes and devices.

Source: Malaysia Star