Police today warned that gangs have developed technology to steal customer bank details from inside Chip and PIN machines.
Criminals are said to be hiding devices inside check-out card readers to reveal PIN numbers matching credit cards, as well as obtaining data to make cloned magnetic stripe cards.
Although these do not work in UK cash machines, criminals can use them to withdraw money in countries that have yet to roll out Chip and PIN. This type of fraud increased by 77% last year, totalling £208m.
The police issued the warning after raiding an alleged card fraud factory in Birmingham. After the raid, carried out by the Dedicated Cheque and Plastic Crime Unit, two people were arrested and charged with conspiracy to defraud.
The unit, supported by £3m funding from the banking industry, is made up of officers from the metropolitan and City of London police forces as well as banking industry fraud investigators.
Detective Chief Inspector John Folan, head of the unit, said, "To date, compromised Chip and PIN terminals have been found in less than 30 retail outlets throughout the UK. Together with the banking and retail industries, we are working to ensure this figure is minimised."
Sandra Quinn, of the UK payments association Apacs, said, "Chip and PIN remains the safest method of payment for goods and services, and, in the unlikely event a cardholder is an innocent victim of this or any type of fraud, they enjoy excellent protection under the banking code, which means that they will not suffer any financial loss."
However, the banking industry was challenged last February over the security of Chip and PIN system.