Chip and PIN - The Facts and the Future

Background to chip and PIN

Visa, MasterCard and Europay defined an international payment standard known as EMV to allow payments to be processed via chip technology. EMV technology used as a global standard means card payments can be accepted all over the world as they always have been.
As far back as 1998, Visa laid out a clear framework and a seven-year timetable for the European migration to EMV chip.
Visa Europe has provided a €168 million chip migration fund to support banks, retailers and vendors to help them implement chip and PIN.
There are approximately 150 million payment cards in issue in the UK, of which approximately 60 percent are Visa cards.

Industry facts

The industry has spent over £1 billion to migrate to chip and PIN but the European Commission estimates that chip and PIN will save banks and retailers over £412 million annually.
Fraud costs the UK more than £1 million a day. A fraudulent transaction takes place every 20 seconds. 36 million consumers have been issued with chip and PIN cards.
76.8 million chip and PIN cards have been issued. £36 million of fraud has been cut in the first six months' of 2005.
600,000 retailers have installed chip and PIN terminals.

Chip and PIN - All you need to know

What is chip and PIN?

The majority of credit and debit cards in the UK are chip and PIN enabled. These contain a small computer chip that can securely store data to identify both the card and the cardholder.
The majority of cardholders paying with a credit or debit card are entering a PIN into a card terminal to verify their identity, rather than by signing a receipt.
A transaction using a chip card with a PIN is very simple. Cardholders will be familiar with the process, which requires them to input a 4 digit PIN when paying for goods.

Why has is it happened?

Chip and PIN is the solution to the rising cost of counterfeit, lost and stolen and intercepted card fraud in the UK.
The chip prevents the card from being counterfeited and the PIN uniquely identifies the owner of the card and prevents a lost or stolen card being used by someone else. If a card is reported lost or stolen, the issuing bank will ‘lock' the chip on the card.
In time, chip and PIN will also lead to faster transaction times and shorter queues, because it will remove the need to sign and verify the receipt.
A more comprehensive audit trail of the card transaction is provided, allowing cardholders, merchants and banks to better determine whether transactions were genuine or fraudulent.

Who is involved?

The entire banking industry is involved including Visa and APACS (Association of Payments and Clearing Systems) and the banks, the BRC (British Retail Consortium), all retailers and cardholders.

Visa Cardholders in the UK

Cardholders need to know their PINs to ensure they can pay using their chip and PIN card. After 14 February 2006 if the PIN is not entered when required, the card may be declined.

Cardholders should contact their card issuer if they do not know their unique PIN.
The PIN can be changed to one that is more personal to you. Your card issuer will direct you to appropriate cash machines where a PIN change service is offered.
The PIN on your card may be locked if it is entered incorrectly three consecutive times. If this happens to you, contact your card Issuer who will advise what to do.

Chip and PIN – The Facts for Retailers

From the 14th February 2006, all chip and PIN cardholders, must use their PIN to be sure they can pay with their chip and PIN card.
To avoid any confusion about whether to ask cardholders to enter their PIN or provide a signature, retailers should always insert the card into the terminal and follow the prompts. The terminal will read the card and will recognise if a signature or a PIN is needed.
After 14 February 2006 some groups will still sign when using their debit and credit cards in the UK. This includes:
- people with old style magnetic stripe cards
- cardholders from countries where chip and PIN has yet to be introduced
- disabled people who are unable to use their PIN
Old Style Cards
Some cardholders are still waiting for new chip and PIN cards to be issued to them. Until they receive their cards they will have to continue to sign for transactions.
Cardholders from Overseas
The UK is the first country to fully roll out chip and PIN. Many cardholders from overseas will still be using old style chip or magnetic stripe cards with a signature. They will continue to sign after 14 February.
Disabled Cardholders
Disabled cardholders can request a special chip and signature card if they are unable to use a PIN. These cardholders will continue to sign before and after 14 February.
Essentially, PIN will replace a signature at point of sale.