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.
Talkback
What incentive is there for a cardholder to have a PIN with the new type Chip and PIN credit card if they are never going to use it to withdraw 'expensive,' cash at an ATM?
Questions worth asking:
Will high-value credit cards & PINs become the target for fraudsters? Fraudsters are already shoulder surfing, using mini-cameras, high-powered binoculars, phishing on the net and making bogus calls just to get hold of banking details AND PINS.
Just think acquire both and they can get money at an ATM which they couldn't do if the card is not operated by a PIN, or alternatively they can go into a Chip and PIN compliant retailer and spend until their hearts content. What will happen to them - nothing. They won't be challenged at point of sale but the card they are using might be withheld at a cash machine.
Will access to 'easy money,' be too tempting for the weak willed? Is this another ploy by the card companies?
Will victims of PIN based fraud be liable if their cards used before they report it lost or stolen? How will they prove they weren't negligent with their PIN. (See Banking Code, articles 12.4 Taking Care adn 12.9 Liability).
Is it compulsory or a legal requirement for a cardholder to accept a PIN with their Chip and PIN card?
Why does the card industry fail to mention Chip and Signature Cards?
Will Chip & PIN prevent ID Theft or CNP fraud?
Are card issuers delivery methods of PINs secure. (Do they call the cardholder to see it they've safely received their PIN)?
Why are ATMs where PINs are used all the time not more secure. (Banks own ATMs in iat least two Middle East countries are covered by the latest digital CCTV. This is for two reasons, one to deter ATM crime and two to resolve disputed customer transaction). A sobering though, ATM fraud rose by 37% last year.
PIN Pads, look at the examples on the Chip & PIN web site. How can you hold a PIN Pad in one hand, enter your PIN with the other and cover the pad at the same time?
Why is the card industry giving out misleading information on the availability of Chip & Signature cards, especially for the disabled. (From the Egg web site. Even when you get your new card you might find that you're still asked to sign for some purchases. The retailer will always let you know whether you need to enter your PIN or sign for your purchase. This is because not all retailers will have the new equipment yet, but all retailers will be upgrading within the next 12-24 months. After this time you won't be able to make a purchase without your PIN.)
Is the last sentence true or false? Enter a Chip & Signature card and the prompt for the cardholder and retailer will be Signature required.
Just a few question and thoughts on a scheme that seems to being bulldozed through for cardholders. Rretailers have a choice and it appears that there's a liability shift for fraud - directly on to the PIN cardholder. What incentive I ask?
Only a couple of retailers in my area have the Chip & Pin hardware installed but it does not fill me with confidence when I use it.
Response times for the system are extremely poor which leaves the shopper standing in the queue feeling embarresed while the system hangs about. About 25% of the time it fails to work at all making it necessary to cancel the transaction.
I prefer to use credit card/debit card most of the time but this does not help. I am tending to steer away from shops using the new process until it is more reliable and somewhat faster.
I appreciate that it should be more secure but it needs to be slick to use if they want us to use it. With modern networking and powerful computers there is simply no excuse for this poor service.
I would be interested to hear a response to this from the suppliers of the equipment.