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Postillion Management Bulletin:
Chip & PIN is the latest
development in the fight against Credit Card Fraud,
where the cardholder uses a secret 4 digit numeric
code to authorise a sale in place of signing a
transaction slip as previously.
The UK has undertaken a comprehensive chip &
PIN programme as part of an international initiative
to tackle fraud involving counterfeit, lost and
stolen plastic cards. A similar domestic PIN-based
system was introduced in France about 10 years
ago and has seen an 80 percent reduction in debit
card fraud. The introduction of chip & PIN
cards in the UK started in October 2003, and today
more than one in five UK Cardholders is already
becoming familiar with the new technology.
It is expected that all retailers will eventually
transfer to the chip and PIN system. Small business
are advised to take steps to get their credit
facilities upgraded to handle chip and PIN as
soon as practical, as it can take as long as two
months for the change to be implemented.
Meanwhile, those who still retain the old system
will be more likely to attract card crime, which
will inevitably target the weakest links in the
system. It is generally expected that the retailer
will be held liable for card fraud committed through
their equipment where chip and PIN are not used
from 1st January 2005. However, where the retailer
has complied with the card scheme’s requirements,
and cardholders have been successfully authenticated,
the retailer should not be considered liable if
a transaction is later found to be fraudulent.
Bill Jones
POSTILLION Business Management Support
Tel: 01494 451239
Independent Advice and Support
Executive Associate, Institute for Independent
Business
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