Pinpointing a way to cut card fraud

Get ready for a French revolution in the way we pay for goods with credit and debit cards. In an effort to combat card fraud, banks and retailers this week agreed to push ahead with moving the UK over to the French system of paying for goods and services with plastic, despite early resistance from shops concerned about costs.

That means everyone will eventually have to type their four-digit Pin number into keypads at tills and will no longer have to sign receipts.

The new system - dubbed "Pin at point of sale" - will cost an estimated £1.1bn to put in place and will affect almost everyone in the country. It will apply to every credit and debit card in circulation and will involve the upgrading of thousands of payment terminals in shops, restaurants and other locations, plus a massive consumer education campaign.

The plan is to start designing and building the system now, then hold a public trial in a year's time. This would be followed by a nationwide roll-out starting in 2003, with the aim that the system will be fully in place by the end of 2004.

Paul Lucraft at Europay, credit card giant MasterCard's European partner, says the introduction of Pin at point of sale together with new cards containing computer chips that are currently being rolled out "will radically reduce the growth in fraud levels".

Now, the only check carried out when someone makes a purchase in a shop is that their signature matches that on the card. Under the new system, someone who has stolen a card wouldn't be able to use it unless they knew the Pin number.

Nearly £300m was lost to card fraud in the UK last year says Mr Lucraft. This fraud often helps to finance more insidious crimes such as child pornography.

At this week's Home Office-hosted meeting the banks also agreed to stump up money to help pay for a dedicated credit card fraud unit of the police.