Chip and PIN

NEWS

Click here for the latest updates on news of Chip and Pin from the EFT-POS.COM site.

March 2005

With the introduction of chip and pin happening in late 2004 the criminal community appears to have seized on their chance to make big earnings in the last year before chip and pin is due to reverse the rising trend of cardholder present fraud.

One of the most concerning aspects is the rise in "mail non-receipt fraud" whereby new cards are intercepted by criminals before their intended recipient receives them. This fraud figure, according to APACS, rose 62% in 2004 to £73 Million. Rich pickings indeed and fairly straigtforward to augment as in 2004 it is estimated that up to 100,000 new chip and pin cards were sent out each day. Even more disconcerting is that some of this could have been avoided by the banks demanding some security checks before the cards were activated. Cards for existing customers with at least Barclays, Royal Bank of Scotland and HSBC were sent out out pre-activated meaning the cards were able to be used immediately by the recipient. LloydsTSB did insist on activation of cards requiring the card user ring a call centre to answer some security questions before the card could be used. Obviously this does cost money to implement.

Highlights from the APACS fraud figures for 2004 are as follows:
- Total card fraud increased by 20% to £500 Million
- Fraud from cloned / skimed cards increased by 17% to £130 Million
- Fraud at cash machines increased by 81% to £75 Million
- Card identity fraud up 22%

Although chip and pin is well underway there still remains approximately 15% of retailers to introduce the technology. In addition 50 million cards in circulation are still not chip and pin (90 Million chip and pin cards are said to be in circulation.)

From the main banks the % of issued cards with chip and pin are as follows:

 

June 2004

New Verifone 3750 and Verifone 3600 full solution chip and pin hardware and card processing software with generic bank approval with BMS, Streamline and Amex with HSBC and LLoydsTSB due shortly. Devices suitable for standalone use using Ethernet fixed or WiFi / ADSL or GPRS for authorisation or for integration with POS software without bank chip and pin testing.

May 2004

The chip and pin barometer report is now available for May detailing the progress made on implementing chip and pin.

Get a free electronic copy of the Chip and Pin Barometer Report

March 2004

The chip and pin programme advertising campaign "Safety in Numbers" starts. The campaign is designed to heighten awareness of chip and pin which is the biggest change to the way consumers pay for goods since decimalisation. The campaign includes TV, radio and press advertising.fs

February 2004

Retailers yet to switch to the chip and pin payment system were warned by Colin Grammell, managing director of Visa in the UK, that they risked a higher level of fraud. He commented that "Fraudsters will soon work out which stores have chip and pin and which don't. They find those weakest links and they will target them without a shadow of a doubt."

February 2004

Analyst firm The Butler Group has warned that "Medium-sized retailers must begin to implement Chip and Pin compliant electronic point of sale systems or risk falling into a new retail underclass." The statement has been made following the release of the quarterly Chip and Pin "barometer" report.

It is thought that the top 25 retailers in the UK will meet the chip and pin deadline. These are the companies that can afford the new technology, testing and implementation costs. They also have the most to lose by not adopting the technology and falling fowl of the liability shift on fraudulent transactions at the end of 2004.

Smaller retailers renting point of sale terminals are also expected in the main to meet the deadline with the banks upgrading the existing terminals.

Many of the 10,000 second tier retailers in the UK cannot justify the cost of replacing systems. It doesn't help that the cost of not adopting the new technology is at present unquantifiable with regard to the charges resulting from the liability shift.

What is known, however, is that fraudsters will migrate to those companies known not to be using the new technology and therefore seen as an easier target.

January 2004

The UK rollout of chip and pin for the processing of customer present credit and debit card payments is progressing steadily, with around eight million next-generation cards issued to date. This equates to an estimated one in six of cardholders who have received a new, secure chip and PIN card, according to a quarterly update 'barometer'. On the retailer side of things it is reported that approximately 100,000 businesses accepting card payments have switched over to Chip and PIN.

The Safeway supermarket chain has completed its rollout, and reports that it is accepting an average of 100,000 successful chip and PIN transactions a week across its
480 UK stores.

January 2004

Verifone 3600 and 3750 chip and pin pad with integrated printer devices now available. These devices are available as hardware only for system integration / card processing solution development. They will both soon be available with an integrated card processing solution for standalone or integration into POS. Please contact us if you require further information.

December 2003

UK banks have admitted that although the majority of credit and debit card holders will be able to use the new chip and pin technology by the end of 2004, the issue of new chip and pin enabled cards is unlikely to have been completed fully by this time. Latest figures indicated are as follows:

Abbey : 4.5 million issued debit cards all to be replaced by the end of 2004
Barclays: 18.8 million issued debit and credit cards 80 per cent to be replaced by the end of 2004
HBOS: 8 million issued debit cards all to be replaced by mid-2005
HSBC: 6 million issued debit cards all to be replaced by the end of 2005
Lloyds TSB: 13 million issued debit and credit cards 80 per cent to be replaced by the end of 2004
RBoS: 22 million issued debit and credit cards with the majority replaced by the end of 2004

November 2003

Diners club has announced that it will not be rolling out chip and pin for its cards in the near future. It states that it considers the current fraud prevention measures it puts in place are currently strong enough. Diners Club claims that it is less susceptible to fraud because it has a strong credit scoring process, issues the charge card itself and actively manages the retailer relationship.

 

October 2003

Following the successful trial in Northampton, plans for the rollout of Chip and Pin have been finalised. The rollout will happen simultaneously across the country and not region by region. The majority of customer present card transactions are expected to be authorised by PIN before the end of 2004. It is expected that 20% of the population will have been issued PIN enabled chip cards by Christmas 2003 and 50% by Spring 2004.

September 2003

The final report detailing feedback from the chip and PIN trial in Northampton has now been published. The chip and PIN trial has been declared a great success by the public, retailers and banks with 83% of the public in Northampton in favour of chip and PIN. By the end of the trial over 200,000 chip and PIN credit and debit cards had been issued, 1000 merchant outlets had taken part and 180 cash machines had been updated with the new chip and PIN technology. In addition to the security and fraud beating benefits, chip and PIN has proved to be an efficient and customer friendly system.

Get a free electronic copy of the final Northampton Chip and PIN@POS trial report.

August 2003

The first offical report detailing feedback from the chip and PIN trial in Northampton has now been published. Highlights of lessons learned from the PIN @ POS trial in the report are:

• Customers in the PIN @ POS trial had a very positive attitude to the increased security and found chip and PIN easy to use.

• Retailers found that the PIN @ POS system cut administrative time and liked the fact that identifying the cardholder was no longer their responsibility.

• Chip and PIN is quick and easy for retail staff to learn.

• Cardholders are quick to learn and are confident and competent by their third transaction.

• Retailers owning their own integrated Point-Of-Sale equipment must act now in order to meet the January 2005 deadline.

• Retailers with 3rd party systems need to engage software and hardware suppliers of card processing solutions early.

• Retailers must allow sufficient time for testing their PIN @ POS solution.

• A good two way relationship between the Retailer and their acquiring bank helps tremendously with chip and PIN implementation.

• Retailers must consider the needs of people with disabilities early in the process of planning for chip and PIN @ POS.

Get a free electronic copy of the 'first findings' Northampton Chip and PIN@POS trial report.

July 2003

There are now over 600 retailers in Northampton involved in the chip and PIN trial, with over 180,000 chip cards issued. . WinTI is running with chip and PIN in the Northampton trial at all:sports, JJB Sports, Pets at Home and Ann Summers. Feedback so far on chip and PIN has been very positive and the acquirers will be looking for an aggressive rollout of chip and PIN technology when the trial is over.

The Verifone SC5000 chip and PIN pad device has been tested and approved for use with Commidea WinTI software. Interface development is now also complete to the Dione Extreme terminals, with development underway for devices from both Trintech and Hypercom. Interfaces to Ingenico Fortronic are expected in 4th Quarter 2003.

June 2003

Initial feedback from the chip and PIN trial in Northampton has proved that the technology works and that consumers and retailers are happy and confident with the PIN@pos process. Further information is available from the PMO's Northampton Trial Presentation given at Retail Solutions 2003.

May 2003

The UK Chip and PIN trial is now underway in Northampton with the first Chip and PIN transactions taking place on the 19th May 2003.

Stores already taking chip and PIN include ASDA, Dolland and Aitchison, Gamestation, Holiday Inn, Phones 4U, Safeway, Tie rack and Vodafone with a total of around 1000 outlets due to join the trial which runs throughout May, June and July.

Around half of the people in Northampton postcodes NN1 to NN7 have been issued with new style chip and PIN cards which allow entry of the PIN at the point of sale to authorise the transaction rather than a traditional signatue. Around 150,000 people in total are due to be issued the new cards in the coming weeks.

INTRODUCTION / GENERAL

As part of the overall strategy to reduce credit/debit card fraud (now running at some 1 million pounds per day in the UK) chip and PIN technology is due to be introduced within the UK. The introduction of this technology is due to take place over the next 2 years for UK Retailers who process credit and debit card transactions in a face-to-face (Cardholder Present) environment. The first bank trial of the chip and PIN technology is due to take place in Northampton in 2003 and solutions from International POS Ltd will be involved in these trials. The development of chip and PIN solutions for credit and debit cards is already well advanced and we already have development kits for customers wishing to interface chip and PIN to our WinTI product. Development kits include software, integration manual, Verifone SC5000 chip and PINpad device and chip and PIN test card.

Following the trial the banks are looking for an aggressive adoption of the new credit/debit card chip and PIN technologies by UK retailers. It is expected that magnetic swipe and chip & PIN will coexist for many years yet, but in January 2005 the liability for fraud will pass to the party that is the 'weakest' part in the chain. What this means is that if the card taken supports chip and PIN and your acquiring bank supports chip and PIN but you are only using a magnetic swipe, then if the transaction turns out to be fraudulent then you will have to bear the cost.

Under this new scheme announced by the Association for Payment Clearing Servives (APACS) with full support from all UK banks and card issuers, cardholders will be required to enter their PIN on a special keypad located close to the Point-Of-Sale. The introduction of this scheme will effect the majority of face-to-face transactions and will remove the responsibility of shop staff to confirm the identity of a card holder and to compare the customer signature to that on the card.

It is hoped that the introduction of PIN @ POS will reduce the current level of fraud, decrease the amount of time it takes to process a credit / debit card transaction and therefore reduce the cost associated with processing cards for merchants. Merchants will also no longer have to store copy vouchers for transactions that have been processed with chip and PIN.

International POS supply credit card solutions that will incorporate Chip and PIN and are involved in the trial in Northampton in 2003.

APACS press release detailing introduction of Chip and PIN at POS into the UK (PDF Document)
APACS Questions and Answers on Chip and PIN
Chip and PIN Implementation
Visa EU Chip Cards and EPOS Initiative
EMV Compliance information