Chip and PIN

A high tech form of monetary transaction has now become standard practice in UK high streets. It could even make cash a thing of the past, but at what cost?

What is it?

Chances are there's a debit card or credit card in your pocket. When buying goods and services, the retailer will swipe through a machine to debit your account. With chip and PIN, instead of signing a receipt to authorise the transaction, you're asked to punch a four-digit number into a terminal.

Retailers have the right to refuse customers who wish to use a signature to authorise their transactions. Chip and PIN has now become the norm.

Why do we need it?

Card fraud is big business. In 2003, before Chip and Pin was trialled, dodgy dealings on the plastic in the UK accounted for over £400 million in the UK. Clearly steps had to be taken to halt this rising practice, in particular the ease with which signatures could be copied, which is why Chip and PIN came in. Since it's introduction, card fraud has been cut by 13%.

How does it work?

The Chip and PIN looks like your standard debit/credit card, but features a microchip unique to your card. So long as you keep your PIN code confidential then theoretically nobody else can use it but you. It means a fraudster can't present a stolen card for payment and get away with it simply by forging the signature. What's more, the microchip cannot be copied or cracked, making it useless to crooks the world over. We hope.

Is there a downside?

Chip and PIN can't be used for small-scale purchases like stamps and milk, so cash still has a future. Most criticism has come from the retail sector, especially small and mid-sized businesses. This is because the point-of-sale systems required for Chip and PIN cost money (to buy or lease), and may also need upgrading. What's more, those retailers still prepared to accept a signature are now liable for the cost of any fraudulent transaction. The banks and building societies no longer shoulder this cost, which some traders claim is unfair.

Disability issues

There is concern that some people with disabilities, such as arthritis or cerebral palsy, may find it hard to use Chip and PIN. Some banks and building societies offer alternative payment methods, like Chip and Signature, so it's well worth getting in touch to discuss the options.