Credit Cards: What is Zero Liability?

According to recent research by MasterCard, identity theft and ATM-related fraud are top payment security concerns. It’s easier than you’d think for dodgy types to steal your credit card information, and credit card fraud is not uncommon in Australia.

What happens if you lose your credit card to a thief or an online hacker and the thief spends money on your card? Well, both Mastercard and Visa have zero liability protection policies on all their cards so that you can get your money back. However, many users of the plastic card either aren’t aware of this, or don’t understand what it means in relation to their spending. So we’re here to help.

What is zero liability?

A zero liability policy that safeguards credit card users, cardholders, and account holders against credit card-related theft and fraud. Your credit card issuer or financial institution won’t hold you responsible and will reimburse you for money spent fraudulently or illegally in your name by others – “unauthorised transactions”.

Zero liability protection should cover unauthorised transactions made in-store using the physical card, over the telephone using the card number and CVV, through online shopping, and contactless payments made with a smartphone or mobile device. Zero liability is one of the main benefits of using a credit card over cash.

MasterCard and Visa have slightly different policies when it comes to zero liability protection, so cardholders should know the specifics of their card’s zero liability policies in order to avoid being burned financially. The policies do share some common ground – with both, the cardholder needs to take as much care as possible in safeguarding their card from risk of “loss, theft, or unauthorised use”.

MasterCard Credit Card Zero Liability

MasterCard credit card

MasterCard’s Zero Liability policy states that cardholders will be protected if the following five conditions are met:

  1. You have exercised vigilant care in safeguarding your card from risk of loss, theft, or unauthorised use; and
  2. You immediately and without delay notify your card issuer upon discovery of the loss, theft, or unauthorised use; and
  3. You have not reported two or more incidents of unauthorised use in the preceding 12 months; and
  4. Your account is in good standing; and
  5. You have complied with the terms and conditions of the cardholder agreement.

The Mastercard policy also has a few other criteria and exclusions, so go to the MasterCard website explanation of their policy or click here to read the policy terms and conditions.

One important exclusion to note is that you are not covered if the thief or hacker used your PIN number to make the transaction – so it’s important to keep your PIN safe! See below for our tips on how to do that.

Visa Credit Card Zero Liability

VISA credit card

Visa’s Zero Liability policy is a little less strict, with their only real exclusions being that their Zero Liability policy “does not apply to ATM transactions, transactions not processed by Visa or certain commercial card transactions”.

VISA states on their website that their policy requires all financial institutions issuing a VISA product to extend provisional credit to cardholders within 5 days of notification of a financial loss from unauthorised card use.

For more information on Visa’s policy, you can go here.

Related Article: How does VISA make money? 

So the upshot is that as long as you take the care you normally would in regard to safeguarding your card, you’ll be protected under your card issuer’s Zero Liability policy. Easy.

Learn more about Credit Cards


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