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.