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LONDON - UK Safeway and IBM on Tuesday announced the details of a new project to tackle the problem of plastic card fraud at the point of sale. Safeway will work with IBM to implement the system based on EMV (Europay, Mastercard, Visa) chip card technology, which is estimated to reduce plastic card fraud in the UK by up to 75 percent. The system, which is due to be implemented across the majority of its 500 UK stores by the end of 2002, means that Safeway will become the first major UK retailer to be fully EMV chip card compliant.
Chip cards are set to replace the common magnetic swipe card in the UK over the next three years due to greater functionality and considerably higher resistance to fraudulent usage, industry observers say. The decision was taken by APACS (Association for Payment Clearing Services) and the BRC (British Retail Consortium) that by 2005, all face-to-face credit and debit card transactions will need to be authorized by a customer keying in a personal identification number (PIN). This new type of payment method, already implemented to great effect in some European countries like France, is set to replace the current UK system of signing a transaction slip, which is far less secure.
Safeway first worked with IBM in the area of chip cards in 1997 when the UK's first public trial of chip cards took place in Northampton among a selected number of retail outlets. Building on the success of this initial trial, Safeway is now working with IBM to deploy 8,000 fully operational chip card terminals by the end of 2002 in almost all of its stores.
"Visa has been working with IBM to develop EMV compliant solutions for large retailers. It has long been recognized by card issuers, banks and retailers that the magnetic stripe card is reaching the end of its natural life," said Colin Grannell, managing director, Visa UK. "In order to tackle fraud across Europe, it is essential that we accelerate the migration to EMV chip cards and terminals. In less than three years, signatures will be largely phased out, and banks and retailers will be using the new chip card technology to offer consumers a range of new products and services such as loyalty schemes. In the UK, Visa member banks have already issued over 20 million chip cards, and we estimate that at least 80 percent of payment cards will be both chip and PIN-based by mid 2004."
The new chip card system will be implemented as a fully integrated extension to Safeway's existing payment infrastructure from IBM. In order to provide the new system, IBM will work with business partner Ingenico to provide the chip card readers and STS for the software to process the chip card data.