Feeds

Smart credit on UK cards. Will it cut fraud?

Chip and PIN

  • alert
  • submit to reddit

3 Big data security analytics techniques

UK banks, building societies and retailers are to introduce a more secure method of authorising credit card payments.

Designed to combat fraud, the Chip and PIN Programme will see the magnetic stripes on credit and debit cards replaced with smart chips. The huge project will see more than 850,000 retailer terminals, 122 million cards and 40,000 cash machines upgraded by 2005.

To help combat credit card fraud in the future, consumers will verify their purchases by keying in a four-digit PIN (Personal Identification Number) - rather than signing a receipt.

For consumers, the new system should mean greater protection against fraudsters, as fraud on skimmed or stolen cards (which account for more than 60 per cent of total losses) will be reduced significantly.

Card fraud is one of the fastest growing crimes in the UK. A record £424.6 million of fraud was committed on UK cards in 2002, up from £411.5 million in 2001, according to UK trade association the Association for Payment Clearing Services (APACS).

Counterfeit card fraud is the biggest category, accounting for £148.5 million stolen in 2002, followed by card not present fraud (£110.1 million) and lost and stolen cards at £108.3 million.

Testing Times

Chip and PIN starts with a public trial in Northampton which will begin in May 2003, followed by a national rollout. During the trial, Northampton consumers will be prompted to use their PIN for one in every two or three transactions, using a range of debit and credit cards, and will become the UK's first Chip and PIN users.

American Express, Barclaycard, Barclays Bank plc, the Co-operative Bank, Egg, Girobank Merchant Services, HSBC, Lloyds TSB, MasterCard, The Royal Bank of Scotland Group, Switch and Visa are all participating in the trial.

Large and small shops, petrol stations, pubs, hotels and restaurants will also be involved. In total, around 1,000 retailers are expected to participate.

Chip and PIN cards and retail terminals in Northampton will continue in use beyond the trial period.

The UK is one of the first countries to introduce chips on cards which meet new global specifications known as EMV (Europay/MasterCard and Visa). In time this means cards will be accepted around the world using the same security checks.

A similar domestic PIN-based system in France has seen an 80 per cent reduction in fraud since its introduction ten years ago. Most European countries, including France, are expected to implement the EMV system over the next five years.

Chris Pearson, Chief Executive of APACS, said: "This is a turning point in the fight against plastic card crime in the UK. More than £1 million worth of card fraud is committed every day - that's a fraudulent transaction every eight seconds. We're putting in measures which will have a significant impact on this figure, will ensure better safety for UK consumers and will help take away the nightmare of card fraud."

Bill Moyes, Director General of the British Retail Consortium, said: "Chip and PIN has the potential to combat the growing incidence and cost of card fraud. Retailers are working closely with the banking industry to ensure that implementation is smooth and customers understand what these changes mean for them."

The Northampton trial is the start of a full national rollout due to be completed by 2005. Cards will be reissued and retailers will upgrade their terminals throughout the period. Consumers do not need to take any action themselves as their card companies will get in touch when they are ready to issue the new type of card. ®

External Links

Chip and PIN Programme - "the biggest consumer project since decimalisation"
"Annual card fraud figures reach record high", APACS report (PDF)
Card Watch: Information on payment card fraud and its prevention

Related Stories

ID theft: a $1bn a year crime
Email scammers target Nochex users
Email scam aims to swipe PayPal users' credit card details
How to get an ATM PIN in 15 guesses
Crackers gain sight of up to 5m credit cards
E-fraud costs retailers millions
Online gambling tops Internet card fraud league

3 Big data security analytics techniques

More from The Register

next story
Obama allows NSA to exploit 0-days: report
If the spooks say they need it, they get it
Samsung Galaxy S5 fingerprint scanner hacked in just 4 DAYS
Sammy's newbie cooked slower than iPhone, also costs more to build
Putin tells Snowden: Russia conducts no US-style mass surveillance
Gov't is too broke for that, Russian prez says
Snowden-inspired crypto-email service Lavaboom launches
German service pays tribute to Lavabit
Mounties always get their man: Heartbleed 'hacker', 19, CUFFED
Canadian teen accused of raiding tax computers using OpenSSL bug
One year on: diplomatic fail as Chinese APT gangs get back to work
Mandiant says past 12 months shows Beijing won't call off its hackers
Call of Duty 'fragged using OpenSSL's Heartbleed exploit'
So it begins ... or maybe not, says one analyst
Heartbleed exploit, inoculation, both released
File under 'this is going to hurt you more than it hurts me'
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.