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Major credit cards shake-up
By Alexa Baracaia, Evening Standard
21 August 2003

The face of shopping is to be changed forever with the abolition of the traditional credit card system.

In a revolution to be introduced by major supermarkets and stores - including Marks and Spencer, Tesco and McDonald's - the 40-year-old method of customers signing on the dotted line to prove their identity will be replaced by them inputting a pin number.

In some cases customers will be asked to provide fingerprints.

All change: customers will need to enter a pin number to pay for goods
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The change, which will be introduced across London in the next 18 months, has been brought about by rampant credit card crime which is costing banks £420 million a year.

Under the new system - aimed at making cloned or stolen credit cards useless - shoppers will tap a fourdigit pin code into a till machine.

Millions of new-style cards have already been supplied to major banks to distribute to their customers when existing cards expire.

Meanwhile, the major high street chains are starting to replace their old swipe machines with new technology - at a joint cost to banks and retailers of £1.1 billion.

Consumers' groups today hailed the so-called "chip and Pin" initiative as a desperately needed solution to credit card fraud, which costs Londoners an estimated £95 million per year.

A Consumers Association spokesman said: "We strongly welcome the news. It's a very valuable piece of consumer protection that we have been fighting many years for, so the sooner the better. I'm just surprised it's taken so long to convince the banks and retail industries."

A pilot scheme began in Northampton in May. Londoners are being targeted next in the bid to extend the scheme nationally.

Banks will begin to issue new credit cards to customers as their old cards expire. The cards will look the same and

will still have spaces for signatures so they can be used abroad and to guarantee cheques.

"Roll-out will start probably from September and we have all the banks on board preparing to issue their new design credit and debit cards," said a spokeswoman for banking body The Association for Payment Clearing ( APACS), jointly spearheading the initiative with the retail industry.

"We're looking at signatures and Pin numbers running side-by-side over the next 18 months as retailers come online to the new system and Londoners get their cards."

Safeway is likely to be one of the first stores to introduce the new Pin system, with all of its London outlets already fitted with the new technology. Tesco, Asda and Marks & Spencer are among those prepared to follow suit fairly rapidly.

The thousands of small businesses that lease their till machines from the major banks will be also upgraded within months.

An M&S spokeswoman said it plans to introduce the system-by the end of the year. "We've been very heavily involved with trials in Northampton and they've gone very smoothly. There has been overwhelmingly positive feedback from customers who understand that it is a means of breaking down fraud," she said.

APACS communications manager Jemma Smith said:

"It's a massive exercise. There are 120 million cards in the UK, because we love our plastic, and most of us have about three cards.

"It's not a silver bullet to all fraud but it will combat the biggest areas, which are counterfeit and lost and stolen cards. For the first time in many years we will be ahead of the criminals."

She continued: "France has had a similar system for just under a decade but this is a global technology that we have created, so the French will be upgrading to be compatible with us, while the rest of Europe is likely to follow suit in the next two or three years."

Meanwhile, in a similar effort to tackle credit card fraud, a unique new fingerprinting scheme is already being tested in west London.

The initiative, which acts mainly as a "psychological deterrent", requires customers to place their thumbprint on the back of a cheque or credit card receipt. It is already running across Hounslow, as well as in Putney and Uxbridge.

Police, local councils and shops have joined forces to run the pilot. In Hounslow alone, businesses have already saved more than £500,000. Card fraud between February and April stood at £376,000, compared to £955,000 between February and April

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