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Banks should make PayWave an option to stop fraud, parliamentary committee tells government

PayWave has led to a rise in low value fraud transactions image www.scamsfakes.com

Cash out: New systems such as payWave have led to a rise in low value fraud transactions. Photo: Eddie Jim

Law-enforcement authorities have won a victory in their bid to stem rising fraud from increased use of contactless payment cards.

The joint federal parliamentary committee on law enforcement has accepted police recommendations that banks seek customers’ consent before activating contactless, or so-called “tap-and-go” and “payWave”, payment services on credit and debit cards.

The recommendation was contained in the committee’s report on its inquiry into financial crime in Australia tabled in parliament on Monday. The inquiry, launched March 2014, sought to detect flaws in the Commonwealth’s ability to effectively combat financial crime.

Tap-and-go payments allow consumers to make purchases up to $100 without having to supply a PIN or signature.

However, the committee heard evidence from Victoria Police that the introduction of tap-and-go payments had led to a rise in low value fraud transactions using stolen cards by up to 100 transactions per wee

Victoria Police argued that whilst banks had weighed the cost of tap-and-go fraud against convenience and found it worked in favour of their balance sheets, they had failed to adequately recognise other policing concerns.

Among them, said Victoria Police, was an increased motivation to steal credit and debit cards, which could drive and increase violent crime.

“The major banks provide a Zero Liability Policy to customers who are victims of fraudulent transactions. This policy is clearly advertised in conjunction with ‘Tap and Go’ technology. Widespread promotion of the Zero Liability Policy is expected to motivate offenders who are likely to see that the victim will not be at a personal loss,” Victoria Police told the committee.

ANZ Banks head of Financial Crime repudiated police concerns, telling the committee “at the moment with the low thresholds on (tap-and-go) I do not think it is a realistic large threat to fraud losses. I think some of the other issues we have been discussing are much bigger threats in terms of financial loss and customer inconvenience”.

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Henry Sapiecha