Safeway is poised to become the first British retailer to roll out
a "chip and pin" payment card system in its stores.
The supermarket chain will implement the new system at 8,000 tills
in its 500 UK stores by the end of the year to reduce fraud and cut
costs.
The Association for Payment Clearing Services (Apacs) estimated
that fraud with the existing magnetic strip and signature cards hit
£411m last year with fraud rates rising at 30% a year.
In a move to cut these levels of fraud, the banks, Apacs and the
British Retail Consortium agreed a 2005 deadline for all in-store
credit and debit card transactions to be authorised by a customer
keying in a personal identification number. The technology has been
available elsewhere in Europe for several years.
Colin Grannell, managing director of Visa UK, said: "Visa member
banks [in the UK] have already issued more than 20 million chip
cards, and we estimate that at least 80% of payment cards will be
both chip and PIN-based by mid-2004."
Safeway will work with IBM Global Services to implement EMV
(Europay, Mastercard, Visa) chip card technology, which is already
widely used across Europe.
"Safeway recognised that there was a solution that would work and
saw the many advantages of implementing it sooner rather than
later," said Ric Francis, chief information officer at the
supermarket chain.
In addition to reducing fraud, the system will create savings by
reducing the amount of administration needed at the point of sale
by removing the need for store signed copies of receipts.
The increased level of security that smart cards bring also means
that the potential exists for retailers to expand the use of
unattended and self-scanning payment terminals.
In a related announcement, IBM Global Services is to offer asset
monitoring and security-identity services based on chip cards and
"smart chips" that send out radio signals.
The services will help companies remotely monitor the condition of
fixed assets, such as pipelines and also track goods in
transit.
John Kirby, vice-president of Global Wireless e-Business services
at IBM Global Services, said: "Smart chips have been around for
some time, but in the past six months demand has ramped up
significantly."