The UK banking industry's multibillion-pound smartcard initiative,
which aims to combat rising levels of credit and debit card fraud,
will reach its first major milestone at the end of this
month.
The UK "chip and Pin" initiative, which aims to cut card fraud
losses by more than half, will be trialled in Northampton in early
2003, preceding a nationwide launch by the end of 2004.
"The end of August will be a major milestone where we will be
reviewing where all the participants are in terms of preparation,"
said Steve Sinclair, communications director at the Chip and Pin
Project Management Organisation, which is overseeing the
initiative. "We will be able to say exactly what stage everybody is
at."
Under the initiative, based on smartcard technology from
Europay/Mastercard and Visa, a cardholder's details will be
embedded in a chip, rather than a magnetic strip, and they will
enter a Pin (personal identification number) instead of presenting
a signature for authentication.
Bank payment association Apacs, which co-ordinates the banking
industry's fight against card fraud, said the initiative should
more than halve card fraud losses, which last year rose by 30% to
£411m.
The Association of Train Operating Companies, which handles more
than £3.5bn in passenger revenue a year, has split its chip and Pin
project into three steps.
Jay Merritt, a spokesman for the organisation, explained, "The
first step, working out which systems are needed, will be completed
in late autumn. The second step, issuing advice to the train
operating companies on procurement of systems, will also be
completed in late autumn. Finally, changing the systems which
handle passenger revenue will be completed by November next
year."
Implementing chip and Pin systems raises a number of logistical
issues specific to the train operators. "A number of stations have
glass in between the point of sale and the customer, which is one
of the main issues," Merritt said. "In Australia, a keypad is
passed to the customer under the glass, and this is one possible
solution."
Retailer Marks & Spencer, which is taking part in the
Northampton trial, is planning to roll out new point of sale
equipment next summer.
Peter Forbes, manager of store financial operations at M&S,
said the firm has been working closely with IT suppliers, banks and
other retailers to help ensure a uniform approach to chip and
Pin.
"We are trying to make the move to chip and Pin as painless as
possible, and by working with other large retailers we hope to make
the process look similar to customers," he said. "The public will
be unforgiving if we do not get this right."
A number of other retailers, including Tesco, Sainsbury's and
Dixons, are also making preparations for the launch of chip and
Pin. However, some companies have threatened to boycott the
initiative because they feel the £1bn estimated cost to the UK
retail industry of implementation outweighs the potential
benefits.
Trade body the British Retail Consortium is generally supportive of
the initiative but still has a number of reservations. "Many issues
remain to be resolved, not least to ensure that the massive level
of investment required from retailers to introduce the technology
can be justified alongside other customer service improvements," a
spokesman for the organisation said.
www.chipandpin.co.uk/