Chaos looms as credit-cards 'pen' system signs over to PIN.
Welsh shopkeepers have warned that the move to the chip and PIN system of card payment tomorrow could cause chaos for shoppers. From Valentine's Day, customers will no longer be able to sign for purchases made with credit, debit and store cards, and will have to type in four-digit Personal Identification Numbers (PIN) instead. The system is designed to reduce card fraud. But not everyone thinks the new system will improve matters. Checkout assistant Meriel Jones, from Caerphilly, said, 'PIN numbers are not practical. They are easily forgotten; often the wrong numbers are used with the wrong card. Changing all your cards to one PIN number makes theft and fraud easier. 'Many people use their birthdays as PIN numbers. Since our dates of birth appear in our driving licences, and most of us carry these with us, if a handbag or wallet is stolen with both cards and driving licence in them, the potential for loss is huge.' There are also fears that card thieves would switch to using stolen cards online, or over the telephone, where PINs are not needed. So called 'card-not- present' fraud rose by 29% in 2005, and is now the biggest type of card fraud. Consumer groups have also raised fears that disabled and elderly people would be the worst hit by the changes. The National Consumer Council has said as many as three million elderly or disabled people would have difficulty using the chip and PIN system. Customers who might have difficulties can apply for cards with chips that can be signed for. Around 100,000 have been issued already, but there have been reports of difficulties getting hold of them, particularly from smaller banks and building societies. Claire Whyley, deputy policy director at the NCC, said, 'We are really disappointed that banks haven't taken their responsibilities to vulnerable customers more seriously.' The Royal National Institute for the Blind also said some disabled people had not been allowed signature cards by banks, and some had them refused by retailers. The chip and PIN system was introduced to help combat theft and fraud. Card crime went up by more than 5000% between 1995 and 2005, and it was predicted that if the new system was not introduced, then losses to fraud would rise to more than pounds 1bn by 2008.
When the system was introduced in France in the 1990s, it reduced stolen card fraud by more than 80%. Payments group Apacs have claimed lost and stolen card fraud is down almost 30% already since the introduction of chip and PIN in the UK.
A successful trial in Northampton in 2003 led to the universal introduction of the system. From midnight on February 14, shops will be able to refuse purchases if customers cannot enter their PIN. It is estimated the changeover has cost banks and retailers around pounds 1.1bn. However, around one in 10 shops still do not have the technology to process PIN purchases on cards, including many B&Q stores, as well as smaller shops. These shops will be liable for fraud committed on the premises from tomorrow.
Half-a-million customers have still not received new chip and PIN cards as replacements for their old ones. They will be able to sign for purchases after February 14, as well as people with cards issued abroad. For people worried about the new card paying system, Ms Jones said, 'My advice is to read the rules that come in your letter with your PIN number and stick to them. 'Failing that, do what I'm going to do and dig out that old relic and friend - the good old fashioned cheque book.': Your card questions answered:What are chip and PIN cards? Chip and PIN cards contain a microchip which is used to securely store data on the card. People with the cards also verify a purchase by keying in a four-digit PIN. Why have they been introduced? To reduce card fraud. The chips store information more securely than the old magnetic strips on cards, meaning the cards cannot be copied or 'skimmed'. Verifying a purchase using a PIN rather than a signature also makes it harder for criminals to use lost and stolen cards. How do I know if I have a chip and PIN card? You should know if your card is a chip and PIN card as your bank will have sent you a PIN to use with it and a leaflet explaining the new system. You can also see the microchip on the front of the card. What should I do if I don't have one of the cards? If you have an old-style card you can continue to buy things by signing a receipt. Your card issuer is likely to send you one of the new cards in the near future. Can I continue to sign for purchases even though I have one of the new cards? No, from midnight on February 15 shops will have the right to decline payment from chip and PIN cards if the cardholder does not know their PIN. Can I change my PIN? If you want to change your PIN take your card to an ATM, select the option that allows you to change your pin and simply follow the on-screen prompts. Can I use the same PIN for all my cards? While there is nothing to stop you using the same PIN for all your cards, it is not recommended as it would make all your accounts vulnerable to fraud if someone found out what the number is. What if I forget my PIN? If you forget your PIN contact your card issuer and they will provide you with a new one. Is there an alternative for people who can't use chip and PIN cards? Elderly people or people with disabilities who cannot use a chip and PIN card can apply for a chip and signature one instead. Can I use my card abroad? Chip and PIN cards can be used all over the world. In countries that operate the chip and PIN system you will be expected to verify purchases using your PIN. In countries that do not yet have the system in place, you will continue to sign a receipt to pay for items.