What is Chip and PIN?
Why must I change?
What is the Impact?
What are the benefits?
What steps must I take?
How can I minimise the cost?

Why must I change?

• To combat fraud

Over a million pounds are being lost every day within the UK because the magnetic stripe on the back of a plastic payment card is no longer secure enough. A similar picture is presented across the world. If no action is taken, this figure is expected to double by 2005 and this could trigger the collapse of the whole card payments system, coupled with a disastrous effect on the retail community.

A consortium of Europay MasterCard and Visa (EMV) have developed standards for a state of the art payment card which overcomes the security problems associated with magnetic stripe. The chip and PIN programme was formed to implement these standards in the UK.

• The Chip and PIN programme

The UK's chip and PIN programme is an initiative launched by the government and the banking industry to crack down on card fraud. Its purpose is to manage the UK's migration from magnetic stripe to EMV chip and PIN over the next three years. It addresses all aspects from town trials [see: what are the town trials?] to full roll out; from card holder education to system certification; from traditional point of sale to cash dispenser.

• The liability shift

After the end of 2004, the liability for fraudulent transactions at the point of sale will shift from the bank to the retailer if the latter is not making use of chip and PIN technology. This will apply to the whole of Europe and not just the UK. If a bank does not support chip and PIN, the liability will shift the other way.

• Consequences of not changing

Not only will there be the exposure to the financial risks resulting from the liability shift, but retailers who do not change will become focused targets for card criminals.

See also:

what is chip and PIN?
what are the benefits?

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