Chip and PIN: the issues still to be addressed

As S&N's chip and PIN trial continues, there are still some issues to be addressed. Phil Mellows takes a look.

Three weeks into the chip and PIN credit card authorisation trial in Northampton, the experiment has thrown up only one serious flaw in the plan for the pubs so far involved - the customer.

A gentleman at one of the nine Scottish & Newcastle (S&N) houses pioneering the new technology was asked for his PIN number and proudly yelled it back across the bar - which does rather destroy the point.

Apart from that, reports S&N EPoS manager Steve White, "it's going pretty well".

Over the next couple of weeks S&N will increase the number of outlets taking part to 22, representing a cross-section of pubs, restaurants and hotels. Three different types of hardware will be tested, including hand-held terminals for table service.

So far there have been no technical hitches, but for Steve the main aim of the trial is to bring to light and tidy up any practical issues and decide on the right equipment to suit different kinds of operation.

The point of chip and PIN is to improve security and put a stop to soaring card fraud, currently rising at the rate of 30 per cent a year and set to cost the country £800m a year by 2005.

One slight worry that has sprung up during the trial is around the security of the PIN side of the equation. In a crowded bar could fraudsters not easily thieve customers' numbers as they key them in?

"People have asked whether there should be a shield on the customer's terminal," said Steve. "That's been a non-issue where the scheme has been tried on the continent, but pubs are different to supermarkets in that you are more likely to have people leaning over your shoulder at the bar, so it could be a problem. We'll have to see.

"Generally the customer reaction has been pretty positive and while some staff have said it is slower, others have said it is quicker."

The likeliest objection from the trade side of the bar may be the cost. S&N has so far spent £50,000 on the Northampton trial and Steve anticipates that chip and PIN will work out to be more expensive than existing authorisation methods.

"I think we will simply need more devices at the bar to maintain customer service and it could well drive an increase in hand-held terminals for table service," he said. "We shall have to see what benefits we can get out of the extra investment."

S&N will carry out a formal survey to measure the performance of chip and PIN across the 22 pubs at the end of July.

Chip and PIN facts​

• by Christmas 2004, all credit and debit card transactions will be authorised by the chip and PIN system, replacing the current swipe and signature method
• a customer's card will be inserted into a machine linked to the bank which reads the information on the microchip on the back while the customer, instead of signing the receipt, keys in a four-digit personal identification number (PIN) on a separate keypad
• if the number matches up with the one on the card within two attempts the payment is authorised.
• chip and PIN is being trialled in and around Northampton. Some 150,000 people, half the town's adult population, have been issued with new cards and a number of shops and supermarkets - plus nine pubs - are already taking part
• the trial will continue through June and July, with more outlets coming on board, and then the scheme will be rolled out across the country
• for more information and help go to www.chipandpin.co.uk.