Retailers to Combat Fraud with PIN

Independent stores are being told to start upgrading their point of sale credit card readers by next May, if they are not to fall prey to changes in fraud liability that could hit them for £800m.

In January 2005 liability for card fraud, where preventative measures could have been taken, will shift from banks to retailers. By installing devices capable of reading the so-called chip and Pin cards, retailers will be able to protect themselves. But while some retailers hire their card readers from banks, those that do not will need to install new systems.

Following a successful trial of the technology in Northampton this year, retailers should start upgrading their systems by next May to have the readers installed before Christmas 2004. "The trial showed that time is a crucial factor and allowing enough time for planning, testing, approval, training and implementation is crucial to success," said David Smith, corporate affairs director at the British Retail Consortium.

If retailers want to avoid putting in new systems before the busy Christmas period, that would mean starting before May. Government figures put card fraud in 2002 at £424m, a figure which is predicted to rise to £800m by 2005. Most of this is from 'skimming', where fraudsters copy a genuine card's magnetic strip details and transfer them to another card.

Chip and Pin cards tackle the problem by getting customers to key in a four-digit code to authorise transactions rather than by signing a receipt