Point Four

Chip and PIN is a new, more secure way to pay with a credit, debit or charge card. Customers simply tap in their four-digit number rather than signing a voucher to pay. Microchips on the cards store data more securely than the current magnetic stripe, making them much harder to counterfeit. The PIN proves that the customer using the card is the true owner, unlike a signature that can easily be copied. Chip and PIN will radically cut the amount of fraud committed on plastic cards in the UK.

Chip cards with PIN verification at point of sale are being introduced as a key weapon in the fight against fraud. In the three years since 1998, UK card fraud has risen from £135 million to over £411 million and using existing methods, the APACS (Association for Payment Clearing Services) projections for 2005 exceed £800 million. The cost of this, whilst largely shouldered by the UK banks, is ultimately felt by bankers, retailers and cardholders alike. The Chip and PIN @ Pos program is a significant initiative in the continuing efforts to beat the card fraud problem. To combat card crime, two things need to be established at the point of sale: that the card is genuine and that the person using it is the true owner.

The ‘smart’ chip cards now being introduced by UK banks meet the objective of ensuring that the card is not a counterfeit by carrying a microchip. This chip holds the card data so securely that it is extremely difficult for fraudsters to copy or alter it. To meet the objective of ensuring that the person using the card is the true owner, all face-to-face credit and debit card transactions will be authorised by the customer keying in a personal identification number (PIN) rather than signing a receipt.