History is made in the war against card crime

Now chip and pin is here, will fraudsters think it's all over? Sam Dunn investigates
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The Independent Online

The chip and pin revolution is about to overthrow the old payment order.

The chip and pin revolution is about to overthrow the old payment order.

In outlets almost everywhere, from small hardware stores to giant supermarkets, customers are starting to pay for purchases using the new method of payment. Instead of handing over a card to be swiped before they sign for goods - a process easily open to fraud - they tap their secret four-digit personal identification number, or pin, into a hi-tech keypad.

The new system aims to cut the £220m raked in by criminals last year using counterfeit, lost and stolen cards.

Some 32 million of the UK's credit and debit card users have now been sent new pin-enabled chip cards. Eight out of 10 of us will possess at least one such card by New Year's Day, according to Sandra Quinn of the Association for Payment Clearing Services (Apacs).

From 1 January 2005, liability for certain types of card fraud will shift away from banks to retailers. For example, if a thief buys goods with your stolen chip and pin card in a store where the fraud could have been prevented had the shop been equipped with the new payment system, the retailer will now have to pick up the bill.

In other circumstances, the banks will carry on footing the bill. So if somebody were to steal your card and either knew or correctly guessed your pin number (or if they pretended they had forgotten the pin and forged your signature), the shop wouldn't be held liable for any purchases made on it.

What won't change, however, is the protection given to the consumer.

"Cardholders will remain fully protected from the cost of card fraud," says Ms Quinn.

The Chip and Pin Programme, an organisation set up to manage the changeover, last week moved to dispel a number of myths that it feels are undermining consumer confidence in the new system. If you do have a chip card and forget the pin number while shopping in a store, you will still be able to pay by signature, it stresses.

And although every one of Asda's 271 and Marks & Spencer's 370 outlets are equipped with chip and pin, both retailers say they will be sympathetic to people struggling to use the new system.

"If you forget your pin, you can use your signature - our staff will be there to help people," says M&S spokeswoman Sue Sadler.

However, retailers are keen to cut the costs they incur from fraud and want you to use the pin system as soon as you can. Not everybody has a chip card yet but after the current transitional period ends, it's unlikely that stores will remain tolerant for very long.

Be prepared: if a store is suspicious about your genuine claim to have forgotten your pin and suspects you are not the main cardholder, you may be asked for more ID before you are allowed to sign for goods.

More than one in five of us carries at least four different credit or debit cards, and many people have trouble remembering different pins. They are right to be concerned about this - the wrong pin entered for a third time will disable the card.

Of course, most people who have used their debit card for years will simply keep the old number once it is pin-enabled. But many of those who use credit cards for everyday spending, and never withdraw cash on it, will have forgotten the pin.

"You could change all your pin numbers to the same one," suggests Ms Quinn. "It'll mean that you don't have to write it down anywhere, either."

But if you do this, be aware that you run the risk of all your cards being vulnerable if your pin is divulged. Whenever you tap it in, cover the keypad to prevent prying eyes from seeing your number.

To change your pin number, you'll have to visit a cash machine; your card issuer will either have its own network or be affiliated to one that lets you do this. If you are choosing a new number, make sure you don't pick one that is easily identifiable. Birthdays and well-known dates are popular but make it easier for a fraudster to strike lucky if your card is stolen.

For example, the four digit 1-9-6-6 combination has long been popular with men still rejoicing in England's World Cup triumph. A number that's peculiar to your circumstances will also offer better protection than simply opting for the year of your birth, which many other people might know.

Try not to write your pin number down, but if you really can't remember it, don't keep it with your card. Banks are unlikely to look favourably on anybody negligent enough to do this - and could refuse to pay out if a fraudster uses their card.

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