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A quarter of UK retailers are still confused about the benefits of migrating to Chip & PIN only six months before the deadline to embrace the next-generation credit card standard comes into effect.

The Chip and PIN scheme, which began in October 2003, is designed to make credit and debit card purchases more secure by asking the majority of consumers to enter a four-digit PIN code instead of signing to verify card transactions by 2005. Newly-issued credit and debit cards will come with smart chips to recognise this PIN number when transactions are processed.

More than 20 per cent of retailers have decided to put off the upgrade to Chip and PIN until the next time they replace retail (point of sale) terminals, a joint survey by magazine Retail Bulletin and software firm Retail Logic out today reveals. If retailers follow this course it could be 2010 or even later before all UK retailers can accept the new cards, according to the study.

Operations ranging from retailers with fewer than 10 stores to those with more than 250 were quizzed as part of the survey. More than half (56 per cent) of respondents said either the complexity of the accreditation process for Chip and PIN or a lack of clear guidance from the banks were major obstacles to migration.

Despite this, more than half the respondents (53 per cent) claimed they would be ready before the 1 January deadline, when retailers are expected to have Chip and PIN terminals up and running. After 1 January the fraud liability will shift from card issuers towards retailers.

A further 26 per cent expect to go live no more than six months later, leaving 21 per cent of retailers terminally unprepared even by June 2005.

"It's good to see that an increasing number of Tier Two retailers are seeing the benefits to themselves and their customers of moving to Chip & PIN," said Retail Logic marketing director Mark McMurtrie. "A few months ago it looked as if the number of stores continuing to rely on signature verification would be much higher, but it should be remembered that the readiness dates cited by respondents are estimates - our experience shows that without exception, Chip & PIN migration projects always take longer than expected and that six months is by no means exceptional."

The survey results can be viewed here. Retail Bulletin and Retail Logic plan to repeat the survey to track UK retailers' progress towards Chip and PIN compliance. ®

Related stories

Chip and PIN goes national
Chip and PIN hits 8 million cards
UK credit card fraud down 8%
Retailers must embrace Chip and PIN. Or else

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