Chip and Pin smartcards ready to roll

A groundbreaking trial of new smartcard technology that could slash the UK's £424.6m credit and debit card fraud bill in half will begin in Northampton next month.

Northampton has been chosen as the test ground for a £1.1bn UK 'Chip and Pin' scheme, which is intended to be rolled out to 40 million consumers nationwide by 2005.

Thousands of credit, debit and charge card holders have been issued with new cards that contain secure smart chips, which will make it harder for criminals to 'skim' cards and make copies.

And instead of verifying purchases at cash tills by signing receipts, customers will key in a four-digit Pin, just like at a cash machine, which will be verified by the chip on the card.

Major card issuers, including Barclaycard, MasterCard, American Express, HSBC, Egg, Switch and Visa, are taking part in the trial and have issued Northampton residents with 'smart' versions of their existing cards.

Ian Barber, a spokesman for Barclaycard, told vnunet.com that along with Barclays it has issued 80,000 of the new credit and debit cards to existing customers for the trial.

"We take our fair share of fraud hits and it puts our customers through an enormous amount of hassle. Chip and Pin will be a step change in our ability to counteract counterfeit card fraud in particular," he said.

Around 1,000 retailers are expected to take part in the trial with the likes of Marks & Spencer, McDonald's, Morrisons, Tesco, WH Smith and Woolworths already confirmed.

The UK is someway behind other countries in Europe, such as France, which have been using the Pin method for 10 years and have seen an 80 per cent reduction in card fraud.

A spokeswoman for the Chip and Pin scheme said that the initiative will see "very substantial" reductions in UK fraud figures "of up to 50 per cent".

The scheme is being spearheaded by the Association for Payment Clearing Services (APACS), the UK trade body for the payments industry, which said it will involve the upgrading of 850,000 retailer terminals, 122 million cards and 40,000 cash machines by 2005.

"More than £1m worth of card fraud is committed every day," said Chris Pearson, chief executive of APACS.

"We're putting in measures which will have a significant impact on this figure to ensure better safety for UK consumers and help take away the nightmare of card fraud."