goodbye to signing your credit card slip. As the pen makes way for
the Pin in a new pilot scheme, beating high street fraud is now a
You can choose the PIN that suits
Shoppers who pay for their goods by card rather than cash can
forget about signing on the dotted line in future. Instead, we will
be asked to tap out a Pin number to authenticate the card.
The change is part of a new drive to stamp out credit card fraud,
a crime which accounted for losses of almost £½bn in the UK in 2001.
Shops and shoppers in Northampton are already trialling the new
system, which, it is claimed, will almost wipe out the card
The scheme, which will be rolled out across the UK and the rest
of the world, is known as Chip and Pin because it relies on the
combination of a microchip embedded in the card and a Pin number.
In the more distant future, the technology could be adapted, say
those who helped develop it, to use "biometric" testing such as iris
and fingerprint scanning.
Its introduction will be welcomed by the likes of politician Ann
Widdecombe, who became a high-profile victim of credit card fraud
when her Barclaycard was cloned. The culprits went on a 10-day
spending spree which culminated in them running up a £2,500 bar
Every year, thousands of card users are shocked to find rogue
transactions listed on their monthly statements - the result of card
Much of this is down to so-called skimming - the copying of
details held on a card's black magnetic strip. Counterfeiters simply
write the copied information on to a bogus card and go out shopping.
The receipts are charged back to the original cardholder.
cards with embedded chips are much harder to clone, and the growing
number of these helped cut counterfeit losses last year from a 2001
peak. The latest step of adding a Pin number deals with the problem
of criminals forging signatures on stolen cards.
Defrauded of thousands of
The French introduced their own Chip and Pin system 10 years ago,
and saw card fraud drop by 80%. Australia and New Zealand also use a
"At the time the French didn't have much card usage - only about
20-25,000 places accepted them," says Mike Hendry, Chip and Pin's
technical and operations manager. "But they also had relatively much
higher fraud than us. So the urgency was greater and it was easier
to do something."
But the French security is not tight enough, says Mr Hendry,
hence the need for new technology. The system being used in
Northampton is based on a new international standard, developed with
the world's two biggest credit card companies, Mastercard and Visa,
and will be rolled out globally in the coming years.
A chip holds
the same personal data as a magnetic stripe - cardholder name,
number, expiry date - but can lock it in more effectively, using
Card fraud takes many forms eg: counterfeiting
cards, lost and stolen cards, and card-not-present payments
Counterfeiting was down 7% in 2002, but ID
theft was up by 41%
But while Chip and Pin tackles counterfeiting, a big growth area
for fraudsters is "card-not-present" purchases, such as goods bought
on the internet and over the phone.
Fraud in this sector grew by 15% last year, accounting for losses
of £110m. Usually card details are taken from discarded receipts or
copied down without the cardholder's knowledge. In the future, says
Mr Hendry, mobile phones could be fitted with card slots, to verify
these sorts of transactions.
So does this new system spell an end to card fraud? Probably not,
admit the experts, who are locked in a cat-and-mouse game with
a card transaction is like protecting any other asset. You build
your walls based on how high is the highest ladder," says Mr Hendry.
Soon PIN pads will be appearing in most high
But the in-built flexibility of the Chip and Pin system leaves
room for improvement. One day biometric information unique to the
individual, such as fingerprint details or iris patterns, could be
stored in the card.
Other options are for signatures to disappear from the back of
cards and be digitised in the memory of the chip instead, and for
voice recognition. But such security additions are not cost
effective at this stage and the technology is not up to the job.
Further in the future, says Mr Hendry, the credit card might
shrink to the size of a thumbnail.
"After all, the chip in a card is all that's important and that's
no bigger than a mobile Sim card. So you could have a contactless
card, embedded in a keyring, that you just wave in front of a
reader. It would be quicker and you would never need to hand it over
to someone else."
Add your comments to this story using the form below:
I am one of the chosen few to receive a new chip and pin card
from Lloyds bank for the trial in Northampton. So far I have enjoyed
the new experience, although it was strange at first not to sign the
receipt. It didn't take long to get used to it. I feel really safe
and happy that only I can use my card. I can't wait for it to be
Sandra P, UK
This sounds exactly like the system that has been in use in
Finland for quite a few years now.
In Portugal you need your Pin for nearly all transactions.
Only low value ones like tickets, phonecalls, etc don't need
Carla, UK, (formerly Portugal)
Switzerland has been doing the Pin card verification at
point of sale for a while - at least since we moved here in October
Adam Roscoe, Switzerland
Having used the proposed system in Belgium while posted
there for several years, it amazes me it has taken so long for it to
reach the UK.
Nick Byers, UK
When I was a student in Singapore, this system was already
in frequent use there. This technology is certainly long overdue in
the UK. And I can get back to using my card.
This technology has been out for many years in Sweden and
has worked nicely. This should been introduced in here in UK
I moved to New York (United States) last year where stores
have been using this system for quite a while. It seems to work
well, the only problem is people behind you being able to see the
number you punch in as the keypads are often high up on stalks in
front of the till.
Andrew McKee, US
This does not sound particularly new or unusual. New
Zealand has been using Pin numbers on credit and debit cards for
years. Even the smallest of shops have an electronic funds transfer
position (EFTpos) terminal. I couldn't believe how archaic the
banking system was when I moved to London.
Tsu Egrew, New
It's about time the UK banks started issuing the "chip" cards.
Living in France, I still often use my UK bank card which has
to be 'swiped' through the machine, then I have to sign. The
signature is never, ever checked. I have signed my credit card slips
"Mickey Mouse", "Donald Duck", "Fred Bloggs"... whatever happens to
be in my mind at the time. I've never once been called up on it.
This has often been for goods in excess of £100. My French credit
card uses the chip, and I feel significantly more secure using it.
Gus, Paris, France
We have had the 'Chipknip' Chip and Pin system in the
Netherlands for some time. It is quick, convenient, secure,
and means you can frequently use a card to pay for items that you
would normally, due to the amount involved, use cash for. You have
to remember to "load" your card with cash though.
At last! Australia have been using that system since
before 1996 (my first visit) -I'm sure they all laugh at the UK's
Victorian banking systems.
Nat Hill, UK
Criminals appear to have no problem duplicating so-called
'protected' audio cds or movie dvds. It will be no time at all
before software which can decipher the data on chip/Pin cards is
freely available in markets and on the internet.
At long last!!! This technology has been around for years. The
basics of this started in 1983 and Pin could have been taken up by
1990 but the banks and retailers would not pay. So we had to wait
for fraud to get big enough - so that we could prevent it!
In 1995 I swapped to a credit card with a laser etched signature
and photo on the back, which worked brilliantly, and surely would
prevent fraud in all over the counter transactions, but last year
the card issuer went back to blank unsigned cards to be more "cost
Will they at the same time be insisting that retailers do not
print all your credit card information out on the receipt? Until
this ridiculous and unecessary practice is stamped out identity
thieves will have a field day.
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