Consumers make ready for anti-fraud credit cards

At least half of all cardholders are likely to have a new-style 'chip and Pin' credit or debit card by spring next year, with one in five expected to have one by Christmas, it was announced today.

The new cards aim to combat card fraud through the use of a 'smart chip' which can store information more securely than a magnetic strip. Consumers will also have to verify a transaction by keying in a four-digit Pin number, rather than signing a receipt.

Following a three-month trial in Northampton involving around 150,000 people, card issuers will begin sending the new cards to consumers this month. By spring 2004, the new system is expected to account for one in three transactions.

The roll-out of the new payment system will happen simultaneously across the country, rather than being introduced region by region. It will involve more than 850,000 shop terminals being installed, 122m cards being issued, 40,000 cash machines being upgraded and 2.7 million shop staff being trained.

The initiative is expected to reduce significantly credit and debit card fraud, which reached ?424.6m in 2002. One of its main functions is to help prevent skimming - the process whereby the information on a card is illegally copied and used to create a counterfeit card. It should also make it more difficult for lost or stolen cards to be used.

Sandra Quinn, from the Association for Payment Clearing Services, expressed her confidence in the project. "We tested chip and Pin earlier this year and there is a real appetite for the new system among consumers," she said. "More than 80% of people in the trial said they were in favour.

"Across the country people seem to agree. Our latest survey shows that 84% of people are keen to use it and 95% think it will be easy to use.

"It's full steam ahead from today. New cards will be issued and shops will switch on over time so that a majority of transactions become chip and Pin by 2005."