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Date Published : Wednesday, February 13, 2008
Last year, two of Australia's banks started replacing credit cards with magnetic strips with cards containing computer chips, known as smart cards.
Only now, however, is the move widely being experienced by consumers across the country, as their credit cards expire and get replaced with the new 'smart credit' cards.
Customers with Westpac and ANZ started issuing the new technology in August 2007, with Commonwealth Bank also introducing the cards later in the year.
So far, customers using the newer cards have not experienced problems using them, as they also contain a magnetic stripe so they can be used in the traditional manner of the credit card. However, the state and federal governments are looking at outlawing all swipe machines and replacing them with chip-orientated devices.
Customers pay for items using their security code - or pin number - which is entered into a keypad. The main credit card companies - Visa and Mastercard - claim the system reduces identity and financial fraud.
A similar system - called chip and pin - was introduced in the UK in 2003 and made compulsory in all shops and businesses in 2006. Initially, instances of fraud reduced by 13 per cent but figures by UK payments authority APACS published 18 months into the compulsory use suggested chip and pin fraud increased by 24 per cent.
However, the Australian Payments Clearing Association is pushing ahead with introducing the 21st century cards over the next few years and it may not be long until we forget about the magnetic stripe altogether.
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