Credit or Debit? Credit.

Swipe the card, wait, sales clerk says ‘please sign’, quickly scribble something that you know doesn’t resemble your signature but don’t care because no one has ever checked it anyway.  Been there, done that?  We all do it and somehow it makes some people feel more secure about their credit card transactions, but are they really more secure?  What brings me to this topic today is an email I received from my Australian bank with this message:

“From 1 August 2014, signatures will no longer be accepted for purchases made in person on all credit and debit cards issued in Australia and will require a PIN to complete the transaction.”

You can learn more details at commbank.com.au/pinwise. Their message, “Soon the pin will replace the pen”, is exactly the type of thing that excites me about technology.  Just because something has always been done one way, with a pen, doesn’t mean it cannot be done another way, in this case with a pin.  The Aussies will no longer make useless signatures (and wait), the retailers will no longer transmit the images, the tellers will no longer have to remind people to sign, and the Australian financial institutions will embrace technology driven change with pins ahead of the US.

This isn’t the first time Australian financial institutions have done this, something I realized while studying at Melbourne Business School.  At first I thought it was an oddity when I discovered that in Australia at any retailer you don’t swipe your credit card, you insert it into the machine and a microchip is read.  The microchips can carry more information and are harder to fraudulently replicate.  This technology is coming to the US but slower than it came to Australia.

I also enjoyed the ease and lack of additional fees associated with online bill pay, which I actually always did with my phone.  I didn’t write a check the entire time I lived in Australia; I don’t even know if the bank would print them.  No one would have needed them anyways because through BPAY every institution has a unique ID and you simply transfer money from your account directly to theirs.  Water bill, power bill, rent: it is all done with BPAY and a breeze.  For those of you who are too curious for your own good, BPAY is a registered trademark of BPAY Pty Ltd ABN 69 079 137 518.

I know you can do online billing in the US.  I point out, though, that it is easier in Australia.  The ease goes beyond paying bills.  Owe your friend $20?  No worries mate.  You can do a quick and easy transfer with your phone and the funds are sent immediately.  None of the waiting we have here in the US.  First time transfers are set up in less than a minute too and confirmed instantly by entering a text message code sent to you from the bank.  Email confirmations are automatically sent so you get confirmation right away.

Long story short, Australian financial institutions can probably get the credit for eliminating signatures at point of sale for credit cards first.  When will the US institutions follow?

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