2004
Consumers not ready for Chip & PIN - reveals latest PA survey
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16 July 2004
The technology roll-out of Chip & PIN is gathering pace. However, with the liability shift now just under 6 months away, PA Consulting Group’s latest survey* reveals worrying signs that consumers are not ready for Chip & PIN. If action is not taken, it will have a serious impact for retailers.
Alastair Charatan, PA’s Chip & PIN spokesperson comments:
“While there are some positive findings from this survey, it appears that insufficient co-ordination of the Chip & PIN programme is causing confusion among consumers. This means that the huge investment by retailers, including rolling out new hardware and software across their store network, is not achieving optimal return. The recent high-profile advertising campaign focused predominantly on the security of PIN and so consumers remain unclear on many aspects on Chip & PIN roll-out.”
The key findings of PA’s survey of 500 consumers are that:
Consumers are unable to recall their PIN:
- Only one third of people (35%) knew the PIN number for all their cards - with consumers often only recalling the PIN numbers of cards that they use to withdraw cash. This was a particular issue for credit cards where the habit of avoiding incurring high interest rates and charges on cash withdrawals means that consumers have simply destroyed PIN numberson receipt
- Consumers do not know which of their cards are Chip & PIN enabled. One quarter (24%) of respondents did not know whether their credit cards were enabled.
- Consumers are not getting the opportunity to use their PIN. One year on from the pilots 65% have never been asked for a PIN and only 5% have been asked for their PIN more than 5 times.
Consumers are not convinced of the value of Chip & PIN:
- Despite the recent advertising campaign, confusion persists. This survey found a 93% unprompted awareness rate for the term Chip & PIN. However, when questioned about when Chip & PIN takes effect, only 15% answered correctly and the qualitative answers highlighted confusion.
- Not all consumers believe Chip & PIN will provide greater security. While safety has been key to the consumer messages embodied in the Chip & PIN programme’s ‘safety in numbers’ strapline, this survey revealed mixed views. Those who had experience of using PIN on the continent saw it positively, but others expressed concerns that Chip & PIN could actually reduce security. If thieves managed to get hold of individuals’ PIN they would be able to use your card in retailers unchallenged. The lack of perceived privacy when entering details into the PIN pad was also cited as an issue.
Consumers are not actively planning to improve their ability to use PIN:
- Apathy around changing PINs - The majority (55%) of consumers in our survey said that they would find it difficult to remember their PINs without changing them to one or two familiar numbers, and yet only 30% of those who have been issued with Chip & PIN enabled cards have changed their number. Our survey found that the difficulty in remembering PINs for different cards is likely to lead to consumers rationalising their card use, with one or two dominant cards being used for retail purchases.
- Consumers have experienced difficulty changing PINs. Of those who changed their PIN numbers 40% had found it either inconvenient or difficult. Of these individuals the problems included individuals not being offered a PIN change option at the ATM (47%) and not being able to find the Bank’s ATM (20%) - a particular issue for those using online accounts without dedicated ATMs.
Consumer behaviour in situations when unable to recall their PIN, will have a disruptive impact on retailers and card issuers
- Consumers will resort to other forms of payment. When recalling their last experience of using Chip and PIN 26% had experienced problems. Being unable to recall their PIN 6% paid by an alternative means and a further 18% signed a paper receipt - an option that would no longer be available in 2005. The delay will impact on queuing times and hence customer service in-store.
- Many consumers will abandon purchase - impacting on consumer spending in January 2005. When asked how they would respond if unable to recall their PIN, 42% of respondents said they would be likely to abandon their purchase and return later, with a worrying 38% saying they were likely to abandon their purchase altogether. Given the other findings of the survey, these situations will arise frequently and could depress consumer spending by several percentage points in January 2005 - hitting retailers, as well as card issuers and merchant acquirers.
A call to action
The findings of PA’s survey act as a call to action for retailers to address the lack of consumer readiness for Chip & PIN.
As Alastair Charatan concludes:
“If consumers are not ready for Chip & PIN, retailers will bear the cost of customer confusion and problems. Retailers need to join together to put pressure on the card issuers and the PMO to co-ordinate their efforts and to send out the right consumer messages. In addition, they need to review the potential impact on their retail environment, because as PA’s analysis has shown** even a modest increase in stumble rate caused by Chip & PIN could have a significant impact on queues. Armed with this knowledge they can then plan and manage Chip & PIN, including taking a view on alternative ID that people may be able to use in-store.”
For more information, please contact:
Notes to editors
* Methodology and sample
An online survey was sent to all PA Consulting Group’s UK employees between 21 - 25 June 2004. The 500 employees that responded comprise white collar workers, of different ages located across the UK.
The survey assessed awareness of Chip & PIN, consumers experience of using Chip & PIN and the impact the technology will have on them in the future.
* * PA's simulation analysis
PA Consulting Group has undertaken sophisticated simulation analysis to show the impact of change in transaction times on retail check-out queues. Further information is available on this analysis by contacting Carol Briggs on + 44 (0) 20 7333 6144.
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