Credit Cards UK

Chip And Pin Credit Cards Cut Back On Fraud

 

February 4, 2006

Looks like the Chip and Pin system introduced by the credit card companies, to deal with credit card fraud is showing signs that it is beginning to work, which is great news for all and hopefully it continues.

The Association of Payment Clearing Services (APACS), recently carried out a survey that showed up results of credit card fraud falling by a third, in the months of January to June of this year (2005) and it is all thanks to Chip and Pin.

APACS figures showed that credit card fraud was down 29% on the same period as last year (2004), when credit card fraud was running at a cost of £126.6 million that took in the theft and counterfeiting of peoples credit cards, were as put against this years figures for the same period, which are £89.9 million lost to fraud, then we can see that the Chip and Pin system is moving in the right direction.

The downside to these figures though is that these do not include credit card fraud committed with “card not present” transactions, this is where crooks carry out purchases, were the card details are either told over the phone or simply typed into a computer keyboard and your four digit Pin is not required, where as if you were buying goods from a store, you would have to apply your Pin to make the purchase and this number is only known to you.

This is where the introduction of Chip and Pin has only seemed to push the fraudsters, on to other modes of theft to make up for the money they are loosing and we will see to the effect that “Card not Present” fraud has had in the first half of this year (2005) when the figures are published in November and first impressions are that they wont make for happy reading.

Chip and Pin though has made an improvement in credit card fraud and the initial figures are pleasing and this is despite the fact that the new system is not fully functional, as many people have not received their new credit cards or the systems have not been installed in all stores and shops, so the need for the old metallic strip and sign cards is still there. This is hoped to be phased out by February next year and the Chip and Pin system will be the only one that we will have at our disposal, which could see the fraud on our credit cards cut even further than the encouraging results that we have seen in the first six months of it really being used.

Many shops also still allow the customer to sign for the goods that they are buying even if they are in possession of a Chip and Pin card, but have forgotten their personal four-digit number, but they will be held responsible if any fraud is committed this way, unlike before when the credit card issuer was accountable for any losses, so the sooner that we all get into the chip and pin habit, then the better all round and APAC are coming out with a “I Love Pin” campaign to help and ease the worries that many have when a system that  they are used to changes from one that they are accustomed to, especially the older generation who are more stuck in their ways and still can work the video recorder.

The system is new to most of us but Chip and Pin has been around on the continent for roughly the last ten years and we turned to it after France saw a large drop in credit card fraud of 50%- 80%, though we are now seeing hundreds of successful chip and Pin transactions per second here in the UK.

If you are not still fully sure about how the Chip and Pin credit cards work, then lets try and give you a few pointers.

Firstly the cards will be the same size, though with one major difference in the look that they have, this being the Smart Chip, which is embedded on the front of the card that will have all your personal information that the pin will release when punched into the keypad, where as the old metallic strip held the relevant info to make your purchase. The new smart chip can also incorporate more information than the metallic strip, with future information such as your Biometrics being added to the chip, which will mean for certain that the person using the credit card is the owner.

The transfer from the metallic strip to Chip and Pin though has not been welcome from all quarters as many feel that the credit card lenders are only pushing the Chip and Pin cards to put the onus on the card owner to meet any cost of fraud that may be charged to the card, where as before the credit card issuer was liable, as it is easier to prove that a signature is not yours, than it is to prove that you were not the one who punched in the four digit number.

There is a few noises being made regarding the Chip and Pin system from those who have been critical about it, they do have a point on some of the issues that they have raised, but the fact being is that the fraudsters of this world don’t rest on their laurels and stop when they have reached a certain amount of cash in which they have stolen, so something had to be done to turn the tide that was beginning to engulf credit cards, with regards to fraud, so if Chip and Pin is the system to do that then so be it and initial signs are showing encouraging results that seem to show that it is working, though the real test will be when it is in full function and is the only system that we are all using.

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