The Australian Competition and Consumer Commission (ACCC) is proposing to allow Visa and MasterCard, together with American Express and participating financial institutions, to coordinate in relation to the removal of signatures as a method of authentication for most credit card transactions that are completed in person.
The ACCC considers that without this coordination, Visa and MasterCard would each independently implement mandatory PIN@POS, and American Express would also make similar arrangements, as the mandatory use of PINs is considered by credit card providers and financial institutions to be an important tool to combat fraud.
The ACCC considers that public benefits will arise from the proposed coordination between the card schemes and financial institutions, and that the coordination is likely to lead to mandatory PIN@POS being implemented earlier by more card schemes.
“A coordinated approach and a single message from industry is likely to lead to some efficiencies and less confusion for customers and merchants,” ACCC Commissioner Dr Jill Walker said.
“This coordination is unlikely to significantly reduce competition, as the card schemes will continue to compete on fees and all other aspects of their product and service offerings to financial institutions, merchants and cardholders.”
The watchdog proposes to grant authorisation until 30 June 2015, to allow the applicants to delay the implementation beyond the current dates proposed if necessary.
It has also granted interim authorisation to allow the parties to reach agreements with American Express regarding its involvement in the coordinated implementation of mandatory PIN@POS and the associated public communications campaign.
MasterCard’s country manager Andrew Cartwright said MasterCard said the outcome of the proposed authorisation means better protection for all Australians, both cardholders and retailers alike.
“By coordinating MasterCard’s efforts alongside the other card schemes and financial institutions, Australian cardholders and retailers will benefit from the exclusive use of PIN,” Cartwright said.
“Use of a PIN saves time at the terminal, it’s also a wise choice to help safeguard against fraud due to lost or stolen cards, as the chances of someone correctly guessing your PIN, which can be from four to six digits long, is very small.
“The coordinated approach will ensure the transition from signature to PIN will be as effective as it has been U.K., which moved to mandatory PIN back in 2006.”
This interim authorisation will commence immediately and will remain in place until it is revoked or the date the ACCC’s final determination comes into effect. The interim authorisation granted on 18 September 2013 to permit the parties to commence a joint communications campaign for the voluntary use of PINs remains in place.
Authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010.
Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.
The ACCC will now seek submissions from interested parties in response to the draft determination,with a final decision likely to be made in December.