Punch in a pin to stem fraud

By 2004 customers will type their four-digit pin number into a keypad - seen in use at a store in Briancon, southern France - instead of signing receipts.

Industry insiders said the go-ahead will be given today at a meeting hosted by the Home Office. The change will apply to every one of the 100m-plus payment cards in circulation and will involve upgrading 600,000 points of sale.

A new generation of harder to forge smart cards containing computer chips will also become standard. It is hoped they will combat fraud estimated to cost £292m, up from £135m in 1998. France abandoned signatures in favour of punching in pin numbers a decade ago and card fraud losses fell by 80%.

The hardware, software and new chipped cards will cost the banks £750m, while retailers will have to pay £350m. Public trials are likely to begin in a year.

Most retailers are negotiating to recoup the costs through lower transaction charges, but have yet to reach agreements with Visa, Mastercard, Royal Bank of Scotland and Barclays, which process most card purchases.