Several different credit cards let cardholders pay off a portion or some of their outstanding balance through an instalment plan. These payment options break down your balance into monthly instalments spread over a fixed time or predetermined rate. For example, if you had a $1,000 balance and set up an instalment plan over ten months, you’d pay $100 per month instead of paying it all off at once. This is a basic calculation used as an example only, it does not include the addition of interest to the amount borrowed.
Contactless payments statistics in Australia
Last month I published an article about contactless payments and it seems like it’s a hot topics nowadays because Westpac released its Visa contactless payments statistics for 2017.
They claim that Visa payWave contactless payments increased to 325 million in 2017, which is a 25% uplift compared to 2016. There were 67 million more payments in 2017 than the year before.
In the first month of 2017, Visa reported more than 24 million contactless payments, which by the end of the year increased to over 33 million.
According to Westpac, contactless is the preferred payment method in over 90% of purchases and contactless generated more than 68% of the Westpac Visa cardholders’ total spend.
It’s also interesting to see that St.George Bank (which is owned by Westpac) has higher contactless usage rate than Westpac. The ratio of contactless payments was 95% for St.George Bank customers, while 81% for Westpac customers, which clearly shows the demographic differences between the two banks’ customers. Also, Westpac customers spend 40% more on contactless credit card payments than debit card payments, which shows that customers are comfortable to use contactless payment for more expensive purchases.
It seems like that the fast food industry is the leader in contactless payments (98%), followed by other kind of restaurants (96%), grocery shopping and discount stores (both 93%). Healthcare related payments had the lowest contactless ratio in 2017, only 59%.
There are quite a few brand and technology names in the contactless payments system but the two most widely used technologies in Australia are Visa payWave and Mastercard PayPass (a.k.a. Tap & Go).
I look forward seeing the 2018 report next year but there’s most likely an upper limit for contactless payments and they will never reach 100%.
Here’s a link to the Westpac contactless payments article.
Contactless Payments: How Do They Work?
Are you someone who absolutely hates how long it takes to make a transaction using a credit or debit card? Do you worry about card fraud a lot? If so, you will love contactless payment systems, which involve the use of contactless cards, stickers, key fobs, mobile devices, and wearable gadgets.
In a nutshell:
- It is secure. You don’t need to hand over your card to the cashier. For the entire transaction, the card never leaves your hand.
- It is fast. You don’t need to enter a PIN or leave a signature for purchases under $100.
- It is easy. You just need to hold the card close to the terminal.
Contactless payments make life a tad easier for the average consumer.
History
Contactless cards have been available in Australia since 2006 but it only started to gain traction in the last few years. From the 7.6 million cards issued in 2010, the number grew to 18 million in 2014. With more and more retailers accepting contactless payments, the total number of contactless cards in Australia should reach 33.9 million in 2019, Timetric predicts.
Contactless technology has existed for a while. In fact, it was first introduced in the’90s. ExxonMobil’s Speedpass was the first ever contactless payment system, and it launched in 1997. As you can expect, this technology was pretty revolutionary at that time. Motorists simply had to wave their Speedpass whenever they had to pay for their gas at participating Mobil stations.
Not long after Mobil introduced the tech, BPAY came up with a payment system that allowed users to transact through a financial institution’s telephone or online banking facility. This was launched the same year Speedpass was introduced.
By 2004, tech companies Sony and Philips introduced new technologies to the payment method. Along with the Near Field Communication Forum, they designed a system that brought more security to near-field payments. This paved the way for a variety of wireless payments, including Google Checkout, which came out in 2006. In the following year, payWave made new strides as it introduced a nearly seamless payment experience.
Contactless payment was introduced to mobile devices in 2011. The first cellphones that supported MasterCard PayPass or Visa payWave came out that year. With the widespread acceptance of mobile phones, tech giants and financial institutions made further endeavours to develop contactless mobile payment systems. And today, you can see this technology expanding to wearable tech.
How do contactless payment cards work?
Payment cards come with an embedded chip and a radio antenna that transmit information to and from the checkout terminals. These make it possible for consumers to wave their cards over point-of-sale terminals.
Although the payment procedure is contactless, brushing against a terminal won’t make you accidentally pay for someone else’s purchases. The card has to be held a few centimetres away from the terminal for a second or two.
Any of these cards can be contactless:
- Credit cards. If you use a credit card for contactless payments, transactions will reflect on your credit account. Even when you have a savings or transaction account linked to the card, payments will only reflect as credit. Hence, you will have to pay back the borrowed amount within a certain period.
- Debit cards. Contactless payments through debit cards will draw money from your transaction or savings account. If you want to use the money you have in your bank account, insert the card into an EFTPOS machine at checkout and then select savings or transactions account.
- Prepaid cards. Transactions can only be drawn from the specific amount that you stored on the card.
Before you can make your first contactless payment, you must activate the feature by completing chip and PIN transactions. This ensures that you are the owner of the card. This step also serves as a security measure to lessen the risk of fraud.
This method is absolutely convenient for you since you won’t need to swipe your card on the terminal. For payments that are at least $100, you won’t even have to enter a PIN code nor will you have to leave a signature. But for purchases that exceed that amount, you are required to do either of those.
To make a transaction, inform the merchant of your preferred method of payment. You just need to follow the onscreen prompts and check the amount. Finally, hold the card a few centimetres away from the terminal and wait for a confirmation message, a blinking light, or a beep. These indicate that the transaction was successful.
A few of the major financial institutions that offer contactless payment systems today are Visa, MasterCard, Barclays, and JPMorgan Chase.
Which technology is predominantly used for contactless payment system?
Mobile devices, smartphones, and contactless cards typically use radio-frequency identification (RFID) to make transactions secure.
Other platforms such as Apple Pay, Samsung Pay, and Google Pay use near field communication (NFC). These systems are built using a technique called tokenization.
Apple, in particular, requires all the parties involved in the transaction process such as banks and payment methods to create two elements:
- Also called a device account number, this 16-digit token is unique to every device.
- Encryption Key. This is what formulates single-use signatures or cryptograms. For every transaction, a new encryption key is generated after a fingerprint has been scanned. Apart from providing an extra security measure for the user’s identity, this allows you to double check the retailer involved and the total amount of the purchase.
Both of these elements are installed into a chip, which the device’s operating system is unable to access. During a transaction, the device’s unique token and corresponding cryptogram are sent to the payment provider who checks if both elements match up. When they do, the sale is authorised.
This technology is similar to the way banks protect online accounts by giving their patrons time-sensitive codes. Though hackers may steal a token, they can’t use it without a cryptogram.
Is my card a contactless card? How do you know your card is contactless?
Contactless cards are available from several card issuers. American Express, for example, offers the contactless feature on most of its consumer cards and a handful of business cards.
You can tell if your card is contactless by checking the back. If it comes with the chip and is marked with the universal contactless symbol, then it is contactless.
Will retailers add surcharges on your purchases?
Contactless transactions may cost retailers more especially when you choose to pay with credit instead of by savings or cheque. Not all merchants will add a surcharge for card payments, but those who do may add a surcharge fee that’s between 0.5% to 1.5% of the amount of a purchase.
Know that businesses are prohibited by law to charge excessive surcharge fees on debit, credit, and prepaid card transactions. If you catch merchants doing so, report them to the authorities.
How long does it take for a contactless payment to come out of your account?
Depending on the bank, the transactions may show up on your balance two or three business days after. Some take as much as four days to debit from your savings account. Others take even longer.
Are contactless cards safe?
Compared to magnetic stripe cards, contactless payment cards are more secure.
Contactless payment systems are considered to be safer than conventional payment methods because data transmitted by these cards are encrypted, which can only be accessed by authorized contactless readers.
As already mentioned, you can hold your card the entire time you make the transaction. Entering your PIN isn’t even necessary. Encryption technology protects cardholders’ data, making it nearly impossible to steal information during transactions.
Plus, contactless terminals can only make one transaction at a time. Each transaction must be completed or cancelled before another can happen. That means there’s no way you can double up on payments.
Despite such safeguards, there have been instances of fraudulent transactions in Australia. Forbes said that an Android app can bypass the built-in security of cards, clone the card within seconds and use the information to carry out fraudulent purchases. Apparently, scanners that anyone can buy online can also steal cardholders’ information.
Additionally, anyone that has a near field communication (NFC) reader can access information like the card number and its expiration date simply by moving close to someone with a contactless card.
Banks will routinely look into your transactions to check if nothing is out of the ordinary. They will automatically inform your or send you an inquiry if anything sticks out.
If the card is lost or stolen, inform your bank so they can block the card. They may shoulder the costs if any fraudulent transactions occur, that is, if you ensured the card’s protection and if you notified the bank about the loss right away.
Tap-and-go frauds have been low in Australia. It’s costing about 2¢ for every $100 transaction, which is only a third of the rate of card fraud in the international scene.
Wallet for contactless cards: Is it necessary?
You can take the extra measures to prevent data theft. To protect your information, you can wrap your card in tin foil before storing it in your wallet or you can line your wallet with foil. If you want to look less paranoid, you can always purchase an NFC blocking wallet.
But is all of this necessary?
If you ask Richard Koch, Head of Policy for the UK Cards Association, he would probably tell you that there’s nothing to worry about. A few years ago, when this method of theft first caught the attention of mainstream media, he said that the technology only manages to obtain the card number and its expiry date, which have always been easily attainable. After all, this information is displayed on the front of a card.
According to Koch, most retailers require more than a card number and expiry date to process a transaction. Merchants usually ask for the card security code or the cardholder’s address as a precautionary measure. Retailers who fail to do so will be liable if any fraudulent transactions occur.
How much can you spend on a contactless card?
Contactless purchases have what is called a floor limit, the maximum amount per transaction. In Australia, banks such as ANZ have a $100-floor limit. As long as purchases don’t go over that number, you won’t have to enter your PIN. But for transactions that exceed that limit, a PIN is required.
Since this system doesn’t really require a signature or a PIN verification, banks typically set these limits. The amount also varies between banks.
What happens if you lose a contactless card?
Though the transaction process is very simple, contactless cards are protected in several ways.
If it gets stolen, the thieves won’t be able to use it to their hearts’ content. Banks often set a limit on the number of times a card can be used or the value of the transactions before a cardholder is asked to use the chip and PIN process.
Notify your bank as soon as you can if your card is lost or stolen so they can block that card. In case of fraudulent transactions, you may not be held accountable for the losses incurred, given that you took the necessary precautions to protect the card and to inform the institution as soon as you noticed it was missing.
How can you disable the contactless payment feature of debit cards?
You can disable the contactless feature of your chip card. If you own a Mastercard Tap & Go or Visa payWave, you can disable them through NetBank and the CommBank app.
Using NetBank, here’s how you can disable the feature:
- Log on to NetBank.
- Access Settings.
- Click on the Security option.
- Select Card Settings.
- Choose card.
- Lock the contactless card payment feature.
Using the CommBank app, here’s how you can turn off the feature:
- Log on to the CommBank app.
- Select the Cards menu.
- Choose which card.
- Click on the Settings badge.
- Turn off the feature under security settings.
When you feel like using this again, you can follow the same procedures, but of course, you must activate the contactless feature at the very last step.
Though you might currently be apprehensive to try this out, society might eventually influence you to make the shift.
Contactless payment systems are becoming increasingly popular especially in Australia. In fact, in a study conducted by the RFi Group in 2016, Australia had the highest use of contactless cards among the 16 nations surveyed, including the U.S. and the U.K.
This isn’t surprising since both private and government sectors are interested in the technology. Recently it has been confirmed that New South Wales, Queensland, and Perth are trialling this payment method on public transportation. Meanwhile, Adelaide and Victoria are considering mobile payment methods for public transportation.
If you happen to live in these areas, maybe you should participate in this trial. The commute should enlighten you on how convenient and easy contactless payments are.
Sources:
https://thenewdaily.com.au/news/national/2018/01/31/public-transport-contactless-credit-card-app/
https://en.wikipedia.org/wiki/Contactless_payment
http://www.paymentscardsandmobile.com/debit-and-contactless-dominate-australian-payments-market/
https://www.finder.com.au/history-of-money
https://www.moneysmart.gov.au/managing-your-money/banking/contactless-cards
http://www.bbc.com/news/business-33637492
https://www.investopedia.com/articles/personal-finance/110716/what-are-contactless-cards-and-how-safe-are-they.asp
What is a Black Credit Card?
Choosing the right credit card seems more complicated than ever thanks to a competitive financial marketplace and diverse product developments. Fortunately, Australian banks provide credit card options tailored to suit individual requirements. Banks generally differentiate their premium credit card options according to colours such as platinum, gold or black, while lesser cards are not as imposing or opulent in appearance. Most banks in Australia and around the world advertise their black card as the premium product.
What this realistically means is that black credit cards have a higher spending limit. Black cards also come with fairly steep annual fees, greater opportunities for points rewards and a whole bunch of other perks and enticements to sweeten the deal. Banks analyse spending and repayment data when ascertaining customer value, with responsible spenders in the higher wage bracket identified as prime candidates for a black credit card.
The original black card
Every bank now has its own black credit card version, although the term ‘Black Card’ was the focus of a trademark dispute between competing financial institutions a few years back. It may therefore come as a surprise to know that the original black credit card is actually known as the American Express Centurion Card. This most prestigious of all credit cards is in a league of its own, and although informally known as the Black Card, bears little resemblance to other black credit cards.
For starters, the American Express Centurion Card is invitation-only, and is reserved for mega-rich individuals. Annual fees cost several thousand Dollars and card holders have no spending limit. One investor used their AMEX Centurion Card to purchase an artwork at auction valued at US $170 million.
Suitability for a black credit card
As expected with a premium product, black credit cards offer features that will result in value and savings if used wisely. There are fees involved, and although prestigious, a black credit card can be the wrong solution in the hands of a spendthrift, or when used as a means to escape from financial hardship. Therefore, it’s important to know if you really do require a black credit card. There are some questions worth asking:
- Is your present credit limit too low for your needs?
- Do you pay off your credit card regularly?
- Do you require the features of a black credit card?
- How many credit cards are you using at present?
- Have you researched black credit card options?
Features of black credit cards
Some investigation is required before choosing a black credit card. Features and special offers are moving with the times and banks are eager to tap in to the wealthy market sector. There may be more room to negotiate when applying for a black credit card so don’t be afraid to ask for special treatment from your bank manager. Here are some black credit card features worth considering:
- High credit limit of up to $100,000 in some cases
- High yielding rewards and points programs
- Free insurance cover
- Flight and hotel upgrades
- Complimentary hotel accommodation
- Complimentary access to premium airport lounges
- Personal concierge services
- Exclusive promotions and invitations to special events
A black credit card is most useful when used for major expenses and purchases. People whose occupation requires extensive air travel, or those in the business of buying and selling on a large scale will find a black credit card invaluable, and indeed quite profitable.
Black credit cards offered by Australian banks
Australians love to accumulate frequent flyer points and miles, along with other rewards courtesy of their credit card. Australian banks entice customers with special introductory offers, low interest rates, bonus points and miles, and a host of special rewards. Here are a few (not all) black credit card offerings from Australian banks.
If you’re interested in black credit cards issued by banks in New Zealand, I suggest you start with a comparison site, like creditcardscompare.co.nz.
Please note that the credit card offer details were checked on 18th November 2016 and the banks might change the details, so the below information is just a guideline, not accurate product information!
Westpac Altitude Black Credit Card
Exclusive Offer: 100,000 bonus Qantas points if you apply before 5 January and spend at least $5,000 on eligible products or services within 90 days. Other benefits include complimentary travel insurance, special concierge services and VIP airport lounge admission.
- $395 annual fee
- 20.24% purchase rate (p.a.)
- 45-day interest free period on purchases
- $75,000 maximum credit limit
Check details on the product page.
Commonwealth Bank Diamond Awards Credit Card
What Credit Score Is Needed To Get a Credit Card
In essence, it would seem that getting a credit card is easy. After all, credit card company representatives are out and about on the streets and in shopping malls signing up new customers all the time. However, filling out the form is only the first step, and your credit score will be used to determine if you are actually wanted as a customer. So, what credit score is actually needed to get a credit card?
Credit scores in Australia range from 0 to 1200, with average to good credit scores in the range from 510-725, according to getcreditscore.com.au. Credit card providers take your score into consideration when approving a card, and not all credit cards are the same. In theory you could be confident that your average credit score of 665 will hold you in good stead for obtaining a new credit card, but your application will be rejected if the bank requires a score of 670 or more.
The higher your credit score, the more likelihood of credit card acceptance. A high credit score will grant you the opportunity to choose just about any credit card. A slightly lower score will still leave you with plenty of options. But as we get into the average credit score realm, the chances of rejection increase accordingly.
It’s important firstly to know your credit score. Then you can make enquiries regarding your choice of credit cards from various lenders and obtain one that your credit score matches. Otherwise, the tendency to continue applying for credit cards that are beyond your reach will lead to additional blemishes on your credit score.
A high credit score is no guarantee
Even a good credit score is no guarantee of credit card approval, much to the surprise of some applicants. A single previous late payment, or the burden of too much debt in general can limit the credit card application power of anyone, regardless of credit score. Exclusive ‘platinum-style’ credit cards are also difficult to obtain unless you have a long period of good credit history that possibly includes a mortgage, previous credit cards, personal loans, and an overall unblemished history.
In most cases, if your credit score is 700 or above, and you have a clean credit history record for at least a few years, the option of the majority of credit cards will be open to you. Your chances can still be hindered in cases where you already hold many credit card accounts or are stretched financially with other obligations.
Investigate credit card options
Average credit in the 600-700 range isn’t anything to be ashamed of, and is usually only the result of a missed payment or two. A lower credit score is also the norm for a person who has recently commenced using credit. On the downside, there is every possibility that your credit card application will be rejected until your score gets higher. If you are in this group it’s all the more important to investigate your chances of approval before applying, and start by applying only for those cards which meet your credit score range.
If your credit score is below 600, the chances of obtaining a credit card are further diminished, but not impossible. People in this category may have missed payments, had a mortgage foreclosure or been subject to collection agency proceedings. There may still be opportunities to apply for a secured credit card requiring a security deposit, or a debit card using your own money that doubles as your credit card limit. One function of this type of card is to begin rebuilding a good credit history rather than spending money you don’t really have.
Some reasons for credit card rejection:
- Recent late payment or negative finances
- Prohibitive amounts of ongoing debt or high credit balances
- A short credit history
- Too much readily available credit
Sometimes a credit card will be refused due to too much revolving debt associated with other cards in your possession. You may be paying your cards off on time every month, but the overall amount of repayments could mean you are closer to the tipping point of financial hardship. A large outstanding balance resulting from a new purchase or expensive