Bank's picture cheque cards cut fraud losses by 99%

THE Royal Bank of Scotland yesterday became the first high street bank to offer all customers cheque and cash cards with passport-style photographs, in a drive against fraud.

The bank said a trial scheme at 39 branches had cut fraud by 99 per cent and it would now go nationwide. Cards with photographs would be available to a million customers at 800 branches. It was expected that well over half would apply to join the voluntary scheme in the next year.

Royal has broken ranks with other banks, which are sceptical about the benefits of photographs. Opponents say they put too great a burden on shop assistants and do not prevent counterfeiting. Royal, however, said its scheme may be extended later to credit cards, where the average loss for every stolen card is more than twice the pounds 369 for a cheque card. Fraud on cheque, debit and credit cards cost banks pounds 165m last year.

In the pilot scheme, which started 18 months ago, 30,000 plastic cards incorporating cheque guarantee, Switch and cash dispenser functions were laser-etched with customers' photographs and signatures. Fraud losses on the cards totalled only pounds 494, compared with the pounds 45,000 expected with the same number of ordinary cards.

The savings to the bank would be about pounds 1.5m a year if all customers apply for the new cards. There will be no charge and customers will only have to supply black and white photographs of themselves. The etched cards cost pounds 1.20 each to produce, three times as much as normal cards.

In the pilot scheme 31,000 of 100,000 customers approached in Edinburgh, London, Glasgow and Manchester took up the offer, but the bank expects a bigger proportion in the national scheme.

It said the plan had the backing of the police and the Government and was not opposed by Liberty. A spokesman said: 'Customers love it, retailers are much happier than with signatures and we have no problems with civil liberties.' There had been fears the cards could be a first step towards a national identity card.

The photograph cards will be available to customers with gold and silver Highline cards from mid-May and to blue Highline cards from September.