Number's up for card fraudsters

Many British shoppers are already familiar with the latest manifestation of the cashless society because they have encountered it abroad. The UK has lagged behind countries as far away as New Zealand in introducing paperless card payment systems in shops but the technology has finally arrived in the British high street.

Over the next few weeks, Britain's 42 million credit and debit card holders will start to receive new cards that will operate with Personal Identification Numbers (Pins) rather than signatures. Instead of signing a slip of paper, shoppers will be asked to tap in their Pin, using hand-held machines.

Billed by the organisers as the biggest change in shopping since decimalisation, the system is expected to cut the card industry's £425 million a year bill for fraud. There has been an 80 per cent reduction in card fraud since the introduction of a Pin-based payment system in France ten years ago. Information needed to process payments from cards will be held in microchips rather than magnetic stripes, as at present, where it is easier for fraudsters to misuse. Cards embedded with chips will be harder to counterfeit than old-technology ones.

The introduction of the new technology follows a trial during the summer in Northampton. The Association of Payment Clearing Services says that 80 per cent of people who used the new cards in the trial were happy with them.

Does this mean more code numbers for the numerically challenged to deal with?
Possibly. This depends on how many cards you regularly use for shopping. If you use a multi-purpose bank debit card you should be able to use the same Pin number as the one you use at cash machines. If you use credit cards to shop with and do not already know the Pin numbers - which is possible if you don't use the cards for cash withdrawals from machines - you will have to bone up on your numbers. Apacs says card companies will probably reissue numbers to customers who have not used them for some time.

Increasing numbers of cash withdrawal machines will offer facilities to change Pin numbers so that you can choose one that suits you.

How do I get one of the new cards?
You will have to wait for your bank or credit card provider to replace your current cards. The Association of Payment Clearing Services expects that one in five cardholders will have new cards by Christmas. By spring next year half of all UK cardholders should have them and the roll-out programme should be completed by the end of next year.

Where will I be able to use the cards?
Branches of the supermarket chain Tesco and Safeway will be among the first retailers to introduce payment by Pin. Shoppers will start to see the new Pin-payment machines in stores from this month. The British Retail Consortium, representing retailers says household name retailers in all sectors of the retail trade are committed to introducing the system nationally by the end of 2004. This will involve 850,000 shop terminals and 122 million cards.

Will I be able to use the same Pin numbers to shop with my cards abroad?
Not necessarily. Apacs says that although most countries are adopting standard, uniform technology for the implementation of Pin systems, some operate schemes specific to them.

If the banks lose less money from card fraud will they charge less in interest on their cards?
Don't hold your breath. The new chip and Pin technology is costing more than £1 billion to introduce. With card fraud costing around half that each year, this is not such a large sum. But savings on fraud are more likely to keep a lid on charges rather than prompt any reduction.

Why has it taken so long for the new system to arrive in the UK?
The banking industry argues that its system is a state-of-the art one that is being adopted internationally. Some other counties will now have to catch up.