Worries over credit card changes

Many small businesses are still in the dark about plans for the new secure credit cards that are to be introduced nationwide by 2005, the Federation of Small Businesses (FSB) has warned.

A chip and Pin credit card trial, with smartcard technology and four-digit Pin numbers replacing signatures, is underway in Northampton.

But last week the managing director of Visa UK, Colin Grannell, admitted that effective national roll-out of the £1.1bn fraud-busting scheme will depend on communication rather than technology.

Now his concerns about the huge communication project are being echoed by the FSB.

The organisation, which represents small- and medium-sized businesses (SMEs), fears its members will suffer at the start of 2005, when businesses that do not have the new point-of-sale terminals will become liable in the event of fraud.

John Walker, FSB policy chairman, said: "Businesses that rent their terminals from a bank should be okay but others could face substantial costs upgrading tothe new system."

"In many cases they know nothing about these plans. We are calling on banks to do more to promote chip and Pin in the coming months."

Walker added that the changeover deadline imposed by the banks and APACS (Association for Payment Clearing Services), which is only 18 months away, is very tight.

"If businesses don't meet the timeline they will suffer," he said.

Walker is also concerned that fraudsters will turn to 'cardholder not present' crime and buy over the internet or telephone when chip and Pin is introduced.

This form of credit card fraud grew by 15 per cent last year.

"Chip and PIN cards are a great leap forward but the banks need to do much more to combat 'cardholder not present' fraud," he said.