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.”