Chip and PIN will be live across the UK in 2005 in what is one of the biggest ever consumer initiatives. To improve security, all 100 million UK debit, credit and charge cards will be reissued with embedded microchips (the Chip) and customers will be required to key in a Personal Identification Number to authorise transactions (the PIN).
The public and retailers will ultimately benefit from reduced fraud (which cost £430 million in the UK in 2002), but they may initially suffer inconvenience through longer check-out queues in stores, as customers have to deal with unfamiliar technology. For example, as Retail Week commented: 'Even a few seconds' delay as shoppers search for the non-existent slot on a PIN pad or hesitate to hand over their card could impact on busy check-out queues.'
There are many uncertainties over the impact, not least because the industry does not know if the new cards will increase or decrease average transaction times, especially in the initial period when consumers will be learning how to use the new cards. The Association for Payment Clearing Services (APACS), which is co-ordinating this programme, states that 'PIN is faster than signature, so customers will spend less time queuing at the till'.
But during the initial months following launch, even well informed customers will take as long to key a PIN as the current signature-based procedure. A significant proportion are likely to take longer as they try to recall yet another number they need to remember, and possibly revert to authorisation by signature. A recent survey confirmed that many leading UK retailers anticipate such problems, with 45% expecting 'customer acceptance' problems during the changeover. Store staff and systems may also add to delays, as they deal with specific situations for the first time. Some 40% of the survey respondents also thought that 'some customers will never get used to it, and will change the way they shop'.
