The contactless payment limit was increased from $80 to $200 because of health concerns stemming from Covid-19.
The contactless payment limit was increased from $80 to $200 because of health concerns stemming from Covid-19.
A major bank has tightened its detection measures for contactless card fraud allowing it to pick up fraudulent transactions faster despite banks saying there has been little sign of fraud increasing since the contactless limit was raised to $200.
The contactless limit was increased from $80 because of Covid toallow more people to pay for items without touching a keypad.
In August all the major banks told the Herald they had not seen a rise in fraud from the contactless change although ASB noted that while it hadn't seen increased instances of fraud, the average value of fraud had increased with the limit change.
A Westpac customer who recently had her card stolen resulting in a thief undertaking a contactless spending spree, was surprised when the bank got in contact before she had even noticed the card was missing.
"I dropped my credit card and someone picked it up and went on an immediate shopping spree. The bank rang me before I even knew I'd lost the card and they said it was because of the high number of paywave transactions in a very short period of time."
The woman was told by the bank it had changed its algorithm allowing it to pick up the fraud which saw the person undertake several transactions at a shoe store and a supermarket and even book a night at a hotel within a short space of time.
Tiffany Ryan, head of financial crime at Westpac New Zealand, said the bank's systems were constantly being calibrated to detect emerging threats, and were designed to spot unusual or suspicious spending patterns on a customer's card to prevent further fraudulent transactions.
"Contactless fraud makes up a very small proportion of overall fraud attempts, and we haven't seen a noticeable rise in fraud since the limit was raised in April."
Customers are not liable for fraudulent transactions leaving banks to pay and giving them a big incentive to stop fraud.
Ryan said under its CardGuard guarantee, customers whose cards were lost or stolen would not be left out of pocket if they were used fraudulently.
"They can also place a block on a lost card through online banking, which can be reversed if the card is found."
If retailers are suspicious about contactless transactions they can ask for a second form of identification. Photo / file
Asked if retailers were doing enough to prevent fraud given the shoe store allowed three separate payments and the supermarket two separate payments allowing the thief to remain under the contactless limit Ryan said it worked closely with the retail industry to provide fraud education and awareness.
"If we have concerns that a retailer is not doing enough to prevent fraud, we raise them directly with the retailer or their acquiring bank."
But she said fraud could be hard for retailers to detect.
"For example, fraudsters could use a stolen card to make a transaction and then give the card to an associate who returns to use it at the same retailer."
Retail New Zealand chief executive Greg Harford said it was not up to the retailer to make assumptions about why people choose to pay in particular ways.
"There's a variety of reasons why a customer might want to split a transaction. For example, the money might be coming out of different accounts on one card, or different cards might be used for different transactions."
He said if a retailer had real reasons to be suspicious, they could always ask for a second form of identification.
Harford said he didn't think consumers would want retailers to police their banking habits.
"You don't need to justify where you get your money from when you buy a bottle of milk - you would come perilously close to that if you had retailers trying to interrogate customers."
$200 limit
It remains up in the air how long the $200 limit will remain in place.
Harford said the limit increase had been well received by consumers.
"It just makes it easier and there is less physical interaction with the pin-pad as we have had Covid on."
But he said whether it stayed in place was up to the banks.
"Retailers will be very much guided by the banks on this. I think it has been positive and many would welcome it."
Westpac's Ryan said there was is currently no timeline for reducing the contactless transaction limit from $200.
Westpac's card partner Mastercard is also staying mum on the timing.
Ruth Riviere, Mastercard Country Manager, New Zealand and Pacific Islands. Photo / Supplied
Ruth Riviere, Mastercard Country Manager, New Zealand and Pacific Islands, said Mastercard was working closely with stakeholders across the industry to monitor feedback to the increase and the evolving environment.
"To date the response has been overwhelmingly positive and Mastercard is supportive of helping both merchants and consumers continue to transact conveniently, safely and securely."
But Visa, which is used by all the other major banks, has confirmed it will extend the timeframe until at least next year.
A Visa spokesman said: "As we continue to review the changing retail environment and determine an appropriate contactless PIN limit to enable convenient and secure ways to pay in an increasingly digital landscape, Visa has extended the temporary limit of $200 into early 2021 for Visa contactless transactions.
"Any further changes will be announced over the coming months."
