Many UK retailers are unaware of what impact the
chip-and-Pin anti-fraud initiative will have on back office
systems, industry experts have warned.Chip and Pin, which will require cardholders
to authenticate purchases with a personal identification number
rather than a signature, is on trial at stores in Northampton
before a nationwide launch in December 2004.
Much of the focus so far has been on how the
scheme will affect customer-facing systems, such as electronic
point of sale systems and keypads.
However, retailers also need to address back
office system issues, as chip and Pin will completely change the
way card purchases are processed, warned networks firm Allied
Telesyn, which is working with a number of retailers on the
initiative.
The company has estimated that between 75%-90%
of routers being used by retailers are not chip-and-Pin compliant,
as they will be unable to process the extended message lengths the
new payment format will generate.
Steve Eggleton, retail systems consultant at
Allied Telesyn, said tier two retailers have underestimated the
need for back office upgrades. He said acquiring banks have not
done enough to communicate this key message to tier two retailers,
of which there are around 10,000 in the UK.
However, the banks refute this claim. Ian
Green, programme manager for chip and Pin at HSBC, said the tier
two retailers “have not been left out of the loop”.
“We have certainly not ignored the tier two
retailers,” he said. “We have contacted them twice directly and we
are now following that up on a one-to-one basis.”