| The British are known for their Fish & Chips, but Chip & | | | | Objections to the introduction of Chip & Pin in the US |
| Pin has the major anti-fraud development involving | | | | include the cost of introducing the card readers, |
| credit and debit cards there in the last 5 years. "Chip | | | | arguments over who will be responsible for fraud |
| and Pin" refers to the introduction of a microchip which | | | | losses and concerns that the Chip & Pin system is |
| is included on the credit card in one of the corners. | | | | itself not infallible when it comes to criminal elements |
| This chip includes identification information which is read | | | | replicating the technology. |
| by a card reader and when the card is confirmed, the | | | | Cloning chipped cards has become one of the most |
| owner must also input a PIN number in the same way | | | | effective criminal attacks on the Chip & Pin system. By |
| as when they use the ATM. | | | | reading the chip on someone's credit card, hackers |
| The chip identifies the card, and marks it as a real | | | | have been able to then transfer the information to a |
| credit or debit card and which is not in fact a fake. The | | | | duplicate, or cloned, chip which is then placed on a |
| PIN number provides an additional layer of security | | | | duplicate credit card. As the Chip & Pin method does |
| because it is a number which is only known to the | | | | not require verification of the customer's signature |
| owner of the card, so in the case of theft, the card is | | | | (though this is an option), retailers have been defrauded |
| useless because the thief may steal the card (with the | | | | by cloned credit cards being used with the proper card |
| chip) but not have the PIN number which is also | | | | identification being given by the chip, and by use of a |
| required to use the card. | | | | pin number set up by the fraudsters. No further checks |
| Credit and debit card fraud has reportedly dropped in | | | | are then conducted by the retailer due to a more |
| the UK with millions of dollars in savings to the credit | | | | relaxed approach to identifying the customer. |
| card and banking industry and huge savings for | | | | This has led to some litigation in the UK when fraud |
| retailers who had to cover the cost of much of the | | | | has occurred. It was mistakenly thought that the Chip |
| retail credit card fraud which was being committed. All | | | | & Pin cards could not be used in a fraudulent manner, |
| of these costs ultimately end up being passed on to | | | | so when irate customers went to their issuing banks |
| the consumer, so by reducing credit card fraud, | | | | with complaints the cards had been used but, not by |
| everyone benefits. | | | | them, they were dismissed. Only after a series of |
| So successful has the initiative been in the UK, where | | | | court cases which dealt with the issue of cloning, did it |
| every credit and debit card issued uses the Chip & Pin | | | | become publicly known that the Chip & Pin method |
| method and most retailers will not know accept a | | | | was not infallible. Indeed, the argument is that with the |
| credit card which does not use it. American tourists to | | | | advances of technology for duplicating Chip & Pin |
| the UK have encountered some difficulties in using | | | | cards which is easily sourced by fraudsters, the |
| home issued credit and debit cards because the US | | | | method does not provide any additional effective |
| does not have the system here. | | | | protection for cardholders, retailers and the credit card |
| But, if the system has worked so well in the UK, why | | | | industry. |
| has it not been introduced here in the US? | | | | To answer the question, when will Chip & Pin cards be |
| This is a question which credit card anti-fraud and | | | | introduced, the answer is not soon and when it does |
| consumer organisations are asking, but there are a | | | | happen, the methodology will probably be substantially |
| number of objections being cited by the credit card | | | | different from that which is currently employed. |
| industry. | | | | |