In 10 days’ time, customers paying for goods with credit or debit cards must make the final transition from pen to PIN. From February 14, customers with chip and PIN-enabled cards will no longer be able to sign for purchases,except those whose cards have yet to be upgraded to chip and PIN and disabled shoppers who pay using a chip and signature card.
The technology was first rolled out in October 2003 and retailers have had to beat one deadline already - from January 1 last year they became liable for fraudulent transactions if a customer signed for a purchase. However, research released last month by the Chip and PIN Programme found that only 80% of tills in the UK had been upgraded to chip and PIN.
“A lot of retailers are still using old systems,” says Wendy Dobson, sales director for chip and PIN provider CommsXL. “After the deadline customers will wonder why they have not invested in the technology.”
Retailers who are yet to convert to chip and PIN could face a slowdown in trading after February 14, warns Doug Hargrove, chief operating officer, UK & Ireland, for chip and PIN provider Torex Retail.
“There is still an amount of lethargy around the deadline. Retailers who are yet to switch to chip and PIN could experience conflicts with customers at the tills and risk becoming an easy target for fraud,” he adds.
Research suggests that chip and PIN has gone some way in reducing fraud. In November last year, the Chip and PIN Programme found that in the first six months of 2005, chip and PIN had reduced counterfeit card fraud by 31% and lost and stolen card fraud by 27%. Better protection from card fraud may be reassuring for the customer, but does this mean that shoppers could be turned away if they don’t know their PIN after February 14?
The simple answer is yes. According to the British Retail Consortium, if a customer has received their new card but just forgotten their PIN, retailers can decline the purchase. Any retailer who allows a customer to sign will be liable for fraudulent purchases.
Chip and PIN Programme spokesman Mark Bowerman adds: “Retailers will always have the option to ask for an alternative method of payment
such as cash or cheque because, although a retailer may decide to go ahead with the transaction, the card company can still decline it.”
Blaming a failed transaction on the bank seems a popular tactic for the multiples. Morrisons and Tesco both say that they will continue to swipe all cards but will warn shoppers that their bank could decline the sale, while Asda says that it plans to ask its customers for another method of payment. Marks and Spencer says it will try to find a solution before turning any customer away.
All the multiples questioned by The Grocer claim to be ready to meet the deadline, with many taking steps to ensure their customers are ready too.
Tesco says leaflets have been available in all its stores and its staff had been notifying customers of the deadline.
Both Somerfield and Morrisons say they are fully prepared, with the latter planning customer leaflets in all its stores.
Asda, meanwhile, says that it has been heavily promoting the Chip and PIN Programme’s ‘I love PIN campaign’ in all its stores since the beginning of the year.
“We are not foreseeing too many issues,” a spokesman adds. “Most customers are used to being asked for their PIN already.”
Marks and Spencer is letting customers who are PIN-enabled, but choose to sign, know about the deadline. It is also currently looking at other ways to inform customers.
In the independent sector, James Lowman, the Association of Convenience Stores’ public affairs and communications manager, says: “Most independent retailers lease card transaction hardware from third-party suppliers and will have the new equipment in place and operational.”
However, Waitrose has left it until the last moment, blaming problems with technology. It started its conversion to chip and PIN in June 2005 and claimed that the technology would be installed in all its stores by the end of the year but, come December, the roll out was temporarily suspended.
This week it expected to have the facility up and running in half its stores, with the rest ready by February 14.
It had better get its skates on. As CommXL’s Dobson warns: “Those that don’t make the move over to chip and PIN by the deadline will be seen as a poor relation.”