APACS will begin public trials this spring, with the hope of rolling out the technology nationally within three years. The UK card fraud rate is one of Europe’s highest, and this technology should significantly cut the use of counterfeits and stolen cards. However, it will do little to cut the related problem of online and remote card fraud.
UK payments organization APACS has said it is committed to replacing signatures with PIN codes.
The UK’s Association for Payment Clearing Services has said that it remains committed to ensuring that all credit and debit card transactions are authorized by keyed-in PIN, rather than by signature.
Plastic card losses cost the UK banking and retail industries GBP293 million in 2000 alone. The incidence of plastic card fraud is among the highest in Europe: 0.016% for credit cards and 0.014% for debit cards, compared with less than 0.004% in Belgium or France.
One of the reasons is that the UK lacks a national ID card, so the only method of authorizing the transaction at the point of sale is by signature. In Finland, customers using a credit card to pay for items worth more than E50 have to present their photo-ID to prove their identity.
This can be avoided by making the customer key in a PIN code instead of the signature to authorize the transaction. APACS hopes to introduce this system fully into the UK in the next two to three years, with a public trial in an as yet unnamed town this spring.
The banking industry is conscious of potential resistance to the new system. People could find remembering a PIN to do their shopping inconvenient and hard. This means that a thorough ‘education and reassurance’ program will be needed before the actual launch of the scheme.
Additionally, point-of-payment PIN will not help against other types of rapidly growing plastic card fraud, particularly remote payments. eCommerce’s continued growth could mean that by the time PIN codes are in place, tackling online fraud is of greater relative importance than it currently is.
Even so, the introduction of point of purchase PINs should not be underestimated. The vast majority of money in the UK is still paid on location, not online.