Almost half of UK cardholders will be using chip and PIN technology at the point of sale by spring 2004, following the launch of the national roll out of the payments scheme.
The national roll out follows the successful chip and PIN trial in Northampton this summer. The system requires cardholders to enter a four digit PIN instead of signing a receipt to verify transactions.
One in five cardholders are expected to be using chip-based cards by Christmas this year, with half using the technology by spring 2004 and 90% by the end of 2004.
As well as the smart cards, point of sale terminals and tills will also be upgraded to Chip and PIN.
Amanda Miller of the British Retail Consortium, says: "The roll out is a huge task with more than 850,000 shop terminals, 122 million cards and 40,000 cash machines being upgraded and 2.7 million retail staff being trained, so it won't happen overnight."
The Chip and PIN Programme, the UK's migatory organisation, expects 100,000 of the UK's 550,000 tills to be switched to the new system by the end of 2003, with 440,000 tills upgraded by the end of next year.
The roll out is part of a global initiative to cut fraud. A similar domestic PIN-based system in France just for debit cards has seen an 80% reduction in fraud since its introduction ten years ago.