Survey: UK retailers may miss Chip & PIN deadline

Cost and the complexity of the accreditation process are putting retailers off the new smart-card system

More than a quarter of UK retailers are wary of moving to the latest Chip & PIN smart card technology for plastic card transactions, according to a survey conducted by Retail Logic, a maker of payment processing software, and the Retail Bulletin, a retail news Web site.

Of the companies surveyed, 26 percent said they remain unconvinced of the benefits of changing to the new systems.

The deadline for converting UK shops to smart card transactions is 1 January 2005, which would make the UK the first country to move to Chip & PIN systems that meet the EMV (Europay-MasterCard-Visa) standard. Ireland and France are also in the process of upgrading to the new standard.

Smart cards are touted as being harder and more expensive to duplicate than magnetic-strip cards, so using them could cut down on fraud. In addition, the chip technology on smart cards allows their data to be changed and allows them to be used not just for payment but also for loyalty and frequent shopper programmes.

As for who will make the deadline, the survey revealed 53 percent of retailers expect to be ready by January 2005, while 26 percent will make it by June 2005 and 21 percent sometime after that. Given that 20 percent of retailers are putting off the migration until their next point-of-sale hardware upgrade, the migration for all UK retailers may not be complete until 2010.

What's holding back the switch?

Retailers surveyed cited four major reasons: the complexity of the accreditation process (28 percent), lack of guidance from banks (28 percent), technical issues (24 percent) and lack of resources (20 percent).

The cost of the migration will also be high, with the majority of respondents (53 percent) estimating they'll spend between £100,000 and £500,000.