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Last Updated: Saturday, 18 December, 2004, 21:15 GMT
'Chip and pin' security warning
Using chip and pin machine
Chip and pin machines aim to cut credit card fraud
A leading security expert has warned that new chip and pin credit and debit cards could be open to fraud.

Professor Ross Anderson, from Cambridge University, says villains will be able to capture card and pin data to "make up" forged cards.

But the banking industry has rejected his concerns, saying the system is extremely robust.

More than three-quarters of card holders already hold one of the new chip and pin cards.

Problems predicted

Instead of using signatures, customers punch a four-digit code into a special keypad.

Now we're all being trained to use our pins at the point of sale it's a simple matter to set up a market stall and capture card and pin data
Professor Ross Anderson

The cards include a "smart" chip, a better way of storing information than the existing magnetic strips.

They are being introduced to cut fraud with all UK cards expected to be switched to chip and pin by the end of 2005.

But Mr Anderson, an expert in security engineering, predicts problems.

"The sort of thing that I expect to go wrong is that villains will set up in business with equipment that will capture customer pins," he said.

"Now we're all being trained to use our pins at the point of sale it's a simple matter to set up a market stall and capture card and pin data.

"They can make up forged cards and use them, for example, at cash machines."

'Extremely secure'

But Sandra Quinn, who speaks for banks and retailers on chip and pin cards, insists that will not happen.

"We don't think they can use fake machines because the machines themselves are engineered to read the chip so they must be reading the chip very carefully.

Card is inserted in chip and pin terminal at checkout
Check the amount on the screen
Enter your pin on the keypad
You will be given a receipt

"That makes the transaction itself extremely secure."

The industry points to a similar programme launched in France more than a decade ago which led to an 80% drop in card fraud.

Research published last week suggested that one in five people using the new chip and pin cards were still signing for goods rather than using a pin number.

From 1 January, retailers can refuse to accept signatures if the customer has a chip and pin card.

According to the research by card provider Visa, some people were not using their pin because they had not memorised it while other shoppers said the new system made them nervous.

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