Diners Club is delaying the introduction of chip and Pin cards after claiming that its existing anti-fraud mechanisms are strong enough for the time being.
Following a successful trial in Northampton, other banks and retailers have begun rolling out the cards. It is estimated that half of all UK cardholders will have chip and Pin cards by spring 2004.
And after January 2005, credit and debit card issuers complying with the Europay MasterCard Visa (EMV) standards will be able to switch fraud liability to the retailer.
But Diners Club has insisted that fraud is not currently a big issue for the company, and plans to wait until there is a clearer business case for the roll out.
Peter Forbes, head of operations and IT at the card firm, said: "Diners Club Europe will wait until the real product benefits of chip and Pin are identified rather than just fraud protection."
Diners Club, which has more than 300,000 individual and corporate cardholders in the UK, claimed that it is less susceptible to fraud because it has a strong credit scoring process, issues the charge card itself and manages the retailer relationship.
Forbes confirmed that the company has acquired EMV protocol rights and will introduce EMV compliance as soon as fraud becomes a significant threat.
This could happen in late 2005, when counterfeiters shift their attention to banks without chip and Pin cards.
There will be more than 200 million European EMV cards in circulation by the end of 2005, and this will pave the way for better e-commerce authentication.
As current e-commerce and mail order firms do not require a physical card presence, this has led to an increasing "de-materialisation" of plastic cards.
But Forbes explained that growing fraud concerns will lead to a re-emergence of card present verification by using card readers.
"There will be a clamour to use chip and Pin for e-commerce authentication," he said.
"One of the PC manufacturers will be ahead of the game and install chip card readers into PCs. Once this happens all the other PC manufacturers will follow suit."
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