- LONDON (Reuters) -- Britain's banking system will launch a 303 million
pound ($494.8 million) plan next month to roll out over 100 million new
computer chip-equipped credit and debt cards to customers in an attempt
to beat card fraudsters.
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- From the beginning of April the members
of Britain's Association for Payment Clearing Services (APACS), which includes
all major bank and credit card groups, will start replacing their magnetic
stripe cards with cards impregnated with computer chips known as "smart"
or "chip" cards.
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- These cards, which use encryption techniques,
are much harder to counterfeit by fraudsters who "skim" or copy
a card's magnetic stripe and put it onto another card.
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- The banks have already started upgrading
their Automatic Teller Machines (ATMs) to take the chip cards and expect
to have converted 12,000 of their 24,000 ATMs to the system by mid-1999.
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- APACs members also aim to upgrade half
of Britain's 500,000 point of sale (POS) terminals within three years.
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- Management consulting group OSI published
its estimate on Monday of how much the program would cost and urged banks,
retailers and credit card groups to adopt Cardholder Verification Method
(CVM) technology.
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- This CVM system allows the use of personal
identification numbers (PINs) at the point of sale and further reduces
the prospect of credit and debit card fraud.
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- OSI said a full program to upgrade to
chip cards would cost 303 million pounds, including 104 million pounds
for 104 million cards at an extra one pound each, 24 million pounds to
upgrade ATMs, 75 million pounds to upgrade POS terminals and 100 million
pounds for hardware and software upgrades.
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- OSI estimated plastic card fraud would
rise to 304 million pounds by 2002 from 122 million pounds in 1997 unless
smart-card systems were introduced now.
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- It said smart cards would do most to
stamp out counterfeit or "skimming" fraud, which was otherwise
expected to jump to 100 million pounds by 2002 from 20.3 million pounds
in 1997.
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- OSI director John Bragg told Reuters
banks and retailers should move in tandem to convert to the chip-cards
and could halve the fraud rate in five years if they moved quickly.
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- The move to chip cards is seen as generating
new income for the banks and retailers, as well as stopping fraud.
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- Chip cards allow banks and credit card
groups to incorporate loyalty programs with the cards or introduce other
services like electronic ticketing and electronic purses.
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- The use of chip card technology had yet
to take off in Britain and in some other developed countries despite being
available for years.
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- The British card system being rolled
out complies with the recently agreed EMV (Europay, Mastercard, Visa) world
standard and will be the first major rollout of the system in the world.
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- A test of the system using 120,000 cards
was carried out in July 1998 in the British cities of Northamption and
Dunfermline. France uses a different type of smart card system but recently
agreed to bring in the EMV standard.
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- ($1=.6124 Pound)
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