KEY POINTS:
Peter McLeod, managing director of EFTPOS New Zealand, answers questions about the security upgrade of terminals, which starts on January 1.
Who are New Zealand's eftpos network providers?
EFTPOS New Zealand and Paymark are the two eftpos systems operating in New Zealand. EFTPOS New Zealand is
wholly owned by ANZ National Bank and processes a third of all eftpos transactions.
Why do retailers need to upgrade?
The upgrade is required to accommodate two new global security standards being introduced by Visa and MasterCard, which will improve the security of credit card processing and make counterfeit card fraud significantly more difficult. These standards are being implemented in all countries and all terminals to ensure worldwide compatibility.
Will this make everyone's credit card transactions more secure?
Yes. The changes are two-fold. Firstly, the introduction of triple data encryption (3DES) is a change from the original single layer of data encryption, providing more protection for transactions. Secondly, EMV is a new global electronic transaction standard which enables eftpos terminals to process "chip based" debit and credit cards (smart cards), which are gradually being introduced around the world. Chip cards have the data stored on the chip rather than the magnetic stripe, making card skimming considerably more difficult.
What's different about the new equipment that will be used?
In terms of the hardware - the feel and look of terminals - nothing much has changed, except that the terminal will have both a chip reader and a card swipe. If you have a chip card, it will be dipped into the card reader, rather than being swiped, which is the present system for reading card information.
What does this mean for retailers, and what happens if I haven't upgraded by January 1?
Most existing eftpos terminals can be upgraded to the new standards by a relatively simple software upload, which will be done by the eftpos terminal provider. Some of the older models, such as those without chip card readers, will need to be replaced. The costs of doing this depends on the eftpos provider, the model of eftpos terminal, and whether it's owned or rented. For retailers renting their terminals from EFTPOS New Zealand, this upgrade will be completed free of charge. The official upgrade deadline is January 1, 2008, but in recognition of this being in the middle of a busy time for retailers, there will be a short grace period to ensure all terminals are upgraded. Merchants are being encouraged to upgrade as soon as possible to avoid a last-minute rush and to ensure they don't put themselves at risk of being disconnected.
Will retailers get cut off from the network if they don't upgrade?
It's important that New Zealand doesn't fall behind the global timeframe. No set time has been given for a final "drop dead" date, and this decision will be made by EFTPOS New Zealand and Paymark as eftpos network providers. No merchants will be switched off without first having had plenty of warning and every opportunity to upgrade.
Does this mean that I have to change my A" and credit cards by January 1 too?
No. The upgraded eftpos terminals will be able to read all cards, but gradually all card-issuing banks will replace credit cards with the new chip cards as part of the regular re-issuing process. There's no deadline but this will happen more quickly now that eftpos terminals can deal with the new technology.