Move to pin down credit card fraud

A French revolution in the way British consumers pay for goods with credit and debit cards is planned to combat card fraud, which is forecast to rise to record levels.

The government is understood to have ordered banks and retailers to agree a timetable for adopting a system - already used in France - by which customers would type their four-digit pin number into keypads at tills instead of signing receipts. At the same time, a new generation of "smart," harder to forge cards would become standard.

A final decision has yet to be taken, but banking industry insiders say "Pin at point of sale" is viewed as the most viable way forward.

Home Office minister Charles Clarke recently summoned industry figures and voiced alarm at the rise in card fraud, which reached a record £189.4m in 1999. One senior figure in the credit card business said the forecast for this year was "towards £300m".

Lost and stolen cards accounted for more than 40% of last year's card fraud bill. Insisting cardholders input their pin would reduce this dramatically as it is easier to duplicate a signature than to access a card owner's pin number.

"The Home Office has told the banks and retailers that they have got three months to go away and agree a timescale for implementing smart cards and pin at point of sale," said the industry insider. "The bottom line is that the only beneficiaries of not having it sorted are the crooks."

Britain's roll-out of cards containing computer chips began more than a year ago, but only 6m of the 120m cards in circulation have the chips. Banks and retailers have been at loggerheads over who should pay to upgrade terminals to cope with these cards.

A spokesman for banking body the Association for Payment Clearing Services (Apacs) said that, provided it is cleared, the new system would probably not be in place until late in 2003.