4th Nov, 2015

Ditching the pen for PIN: What hospo merchants need to know about the Visa PIN@POS mandate

In October 2014 the Visa PIN@POS mandate was introduced to combat fraud. The mandate builds on the introduction of chip cards by phasing out the use of a signature to authorise Visa credit card payments.

Purchases made using Visa credit cards issued in New Zealand can no longer be validated with the cardholder’s signature, instead Visa credit card purchases require PIN validation. Merchants in the hospitality sector were given an additional year to upgrade their terminals. The deadline has now passed and hospitality merchants will see customers being required to enter their PIN instead of signing to authorise Visa payments.

Why the change?

Credit card fraud has seen a dramatic decline since the introduction of chip technology, attributed to the difficulty involved in replicating the data stored on a chip compared to the traditional magnetic stripe. PIN validation follows the same principle, given that it is much more difficult to guess a PIN number than to replicate a signature.

New Zealand consumers are ready for the change with 96% of Visa transactions in New Zealand already using PIN validation.

How does it work?

From this week your terminal will still display the prompt: ‘PIN or Enter’ for Visa credit card transactions. But the transaction will be declined if the cardholder  presses ‘Enter’.

There are some exceptions to the mandate:

  • Visa payWave contactless transactions, which are protected by both terminal and EMV technology, remain unaffected by the mandate
  •  Some cardholders will be exempt from the mandate – including those with Visa cards issued overseas
Tipping Functionality

The Visa PIN@POS mandate does have an impact on tipping functionality. If you have a credit card tipping solution on your eftpos terminals you’ll still be able to offer the opportunity to add a tip to transactions to customers with Visa cards issued overseas. Customers with Visa cards issued in New Zealand, however, will not be able to authorise tips with their signature.

There are tipping solutions available that allow cardholders to authorise a tip with their PIN. If you’d like to know more about tipping functionality contact us.

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