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    Chip-and-PIN Payment System Suspended at UK's Waitrose Chain

    LONDON, United Kingdom -- A holiday nightmare befell supermarket chain Waitrose, when it was forced to suspend its chip-and-PIN credit card processing system last week because of technical problems. While it is now operating a temporary card payment authorization system, it may be liable for any fraudulent transactions it processes in the meantime.

    LONDON, United Kingdom -- A holiday nightmare befell supermarket chain Waitrose, when it was forced to suspend its chip-and-PIN credit card processing system last week because of technical problems. While it is now operating a temporary card payment authorization system, it may be liable for any fraudulent transactions it processes in the meantime.

    "There have been problems with the card reader," a Waitrose spokeswoman told Computing, a VNU Business Media Europe publication. "Subsequently, problems have also emerged with the software associated with our interim chip-and-PIN system. Because we do not want to inconvenience our customers, we have decided to suspend the system temporarily."

    Waitrose gave no further details about the nature of the problems. "This is a complex technology designed to bolt onto our existing point of sale system, so it is [customized] rather than off the shelf," said the spokeswoman. "Before we implemented our interim system, we piloted it in a number of [stores]. None of the problems we are having at present emerged while the trial was under way."

    The chip and PIN system was developed through a joint effort of the UK retail and banking industries to combat the problem of credit and debit card fraud. There are two elements involved in making a plastic card transaction secure. The first is to ensure that the card is genuine; the second that the person presenting the card is the true owner. The electronic chip inside the card does the former and PIN does the latter. The chip therefore protects against counterfeit fraud and the PIN against lost and stolen cards and those intercepted in the post.

    The retailer is working with card reader supplier Ingenico and software vendor Wincor Nixdorf to bring the system back up as soon as possible.

    Waitrose is also due to update its point of sale systems in the next 18 months, to provide an integrated chip-and-PIN facility. "The system is being piloted in two [stores] and is functioning well," said the spokeswoman. "The technical issues with our interim solution will not affect the rollout of this permanent system."

    But taking too long to resolve the problem can hurt financially, according to analysts. "Although Waitrose has been slower to switch to chip-and-PIN than some of its competitors, it is by no means alone," said Nick Gladding, senior analyst at retail researcher Verdict. "H&M and Bhs are still testing their systems, for example. But the longer Waitrose leaves it, the more it exposes itself to covering the cost of any fraud now that this has become the liability of retailers."

    There is no legal requirement to install chip-and-PIN technology, but companies have been liable for fraudulent card transactions using non-compliant systems since the start of this year.
    -- Miya Knights, Computing

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