Retailers warned over £1.1bn fraud-busting scheme

Trial of 'Chip and Pin' smart credit cards "a success", but plan early for national rollout...

The largest ever trial of fraud-busting card technology by banks, retailers and customers in the UK has been declared a success but firms are being warned to allow plenty of time ahead of the 2005 deadline to implement it nationwide. More than 120,000 people in Northampton, which is demographically representative of the UK average, spent three months testing the 'Chip and Pin' credit and debit cards that use a secure chip, which replaces the magnetic strip, and a PIN number at checkouts instead of a signature on a receipt. The £1.1bn scheme is backed by the British Retail Consortium and clearing house body APACS and aimed at slashing the UK's annual £424m card fraud bill by 60 per cent. All the main banks and card companies along with 1,000 retailers took part in the testing, including names such as Asda, McDonald's, Marks and Spencer, Tesco, Abbey National, Barclays Bank, Egg, HSBC, Lloyds TSB, Mastercard, Switch and Visa. The Chip and Pin trial has been declared a success by those involved and has been well received by customers but a report from participants on the trial, entitled Checking Out Chip and Pin, says lessons have been learnt that need to be taken on board by suppliers, banks and retailers ahead of the nationwide rollout. Retailers, especially the large chain stores, will have initial problems and should allow plenty of time to test and implement the new point-of-sale terminals and to train staff. The report said: "Major retailers did encounter teething problems, which were of the same magnitude as they would usually encounter for any technology project of this size. As a minimum, retailers who own their own integrated point-of-sale equipment will need to allow up to 30 weeks for the planning, procurement and implementation processes, including the preparation of the financial case for changing to the new technology." For banks the main issue that came out of the trial was the need to address configuration problems that caused a small number of transactions to be refused. At the supplier end the report said certification of products is time-consuming and also warned firms not to leave implementing the technology to the last minute to avoid a "bottleneck" of orders that cannot all be met by suppliers. The report said: "Certification proved to be the main challenge for suppliers. Every piece of hardware and software must be approved and every possible configuration between equipment and cards must be certified. This was sometimes underestimated and so took longer than anticipated. For national rollout, early planning and scheduling is therefore essential." Consumers responded well to the new cards, although the report said some people have concerns about tapping their PIN number into a machine in full view of other shoppers. "Retailers will need to ensure that good practice is applied through the national rollout, for example taking care over the placement of Pin pads, ensuring that privacy shields are intact, and doing everything to train staff to show customers how to enter their Pin in a discreet and safe way," it said.