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Cardholders clueless on chip and pin

Chaotic Xmas in prospect for retailers

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Retailers will be bracing themselves for what could be a chaotic festive season following the news that more than half of British cardholders know little or nothing about the new chip and pin card system.

Up to 120 million new chip and pin cards will be winging there way to Christmas shoppers in time for the 1 January 2005 deadline, when retailers will be required to introduce the new system.

The new cards are designed to combat fraud by replacing magnetic strips with information stored on a microchip which customers must verify by keying in a four digit pin number.

IT consultant and fraud specialists, Detica, who commissioned the research said that it had come across incidents where retailers had refused to serve customers failing to remember their pin or even refusing to use it in the first place.

According to David Porter, Head of Fraud & Security at Detica, a lot needs to be done between now and December. He said: "Retailers need to act quickly to help their customers. Nearly three-quarters of the public are confident chip and pin will reduce theft and fraud once it’s explained to them, but retailers can’t afford to begin educating everyone individually at the busiest time of the shopping year. They need to begin a prominent education system in stores now. With 117 shopping days to Christmas, the clock is ticking."

With the number of pin numbers to remember set to increase, analysts are also worried that cardholders may change all their pins to one number or share their pins, a danger that could adversely increase the likelihood of fraud.

At present among those who have more than one pin or security code to remember, almost half pin-share for two or more things requiring a code.

With one in three people affected by card fraud and a cost to the UK of £425m in 2002, Detica are still confident that the new system will significantly reduce card crime.

However there are those who remain cautious about the immediate impact of chip and pin. A chip and pin spokeswoman said of Detica’s findings: "This contradicts all the research we have done. Transaction times are reduced with chip and pin, not necessarily in the first instance, but beyond that it is faster to use a pin than a signature."

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