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Last Updated: Monday, 19 May, 2003, 12:23 GMT 13:23 UK
Anti-fraud credit cards tested
New pin number machine
A similar pin number system in France reduced crime

A new system designed to beat credit card fraud has gone on trial in a British town.

Shoppers in Northampton will be using credit, debit or charge cards that contain a special chip.

Instead of signing for goods, the users will have to enter a four-digit pin number.

If successful, it will be rolled out across the whole country in the summer.

The UK banking industry is hoping the system, which has been commonplace in several European countries for a number of years, will reduce credit card fraud which last year alone cost them an estimated 400m.

It is expected 850,000 retailer terminals, 120 million cards and 40,000 cash machines will be upgraded over the next 18 months.

Credit card cloning

Sandra Quinn, of the Chip and Pin programme, said: "We're learning valuable lessons in Northampton for the national roll-out that will tackle UK card fraud head-on, on an unprecedented scale."

Credit card fraud cost Britain an estimated 420m last year.

The new technology is aimed at combating the growing problem of "skimming" - the most common method of counterfeit fraud.

The magnetic strip on the back of cards, is copied by fraudsters using a handheld card reader.

The card can then be "cloned".

The new cards have a thumbnail-size microchip that stores personal data more securely than the magnetic stripe, making it harder to counterfeit.

Holiday Inn
Dollond & Aitchison
Phones 4 U
Tie Rack
Finding out the Pin number of a particular card is also much harder than copying a signature.

The British Retail Consortium and the Association for Payment Clearing Services (APACS), who are co-ordinating the scheme, said that more than 40 million UK consumers will be using the system by 2005.

Graham Pye, manager of Safeway in Northampton, said: "The introduction of Chip and Pin in our store has gone really smoothly.

"Our customers seem to be quite comfortable with entering a Pin instead of signing their names and people are certainly keen that it foils the fraudsters."

Bryan Wisker, of Asda in Corby, added: "As well as the obvious security benefits it offers customers, the new system saves them time and hassle."

Shopper Caroline Payne said she had used the card twice in Asda.

"I found it really easy to use. It was no problem at all and a lot safer," she said.

About 1,000 shops, pubs, hotels, restaurants, supermarkets and garages in Northampton have signed up for the trial.

And 150,000 people who are customers with American Express, Barclaycard, Barclays Bank plc, the Co-operative Bank, Egg, Girobank Merchant Services, HSBC, Lloyds TSB, MasterCard, The Royal Bank of Scotland Group, Switch and Visa will be sent the new-style cards.

The BBC's John Moylan
"The chip and pin system should cut 60 per cent of card fraud"

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