Interac Association members will begin distributing the new cards to customers this autumn and are also continuing the process of replacing ATMs and retail terminals with chip-enabled devices.

To make payments in store, customers will insert their debit cards chip first into the terminal and enter their PINs.

Interac says the migration will take several years, with each bank and payment processor following their own timeline, but it hopes the majority of ATMs and debit cards will be converted by 2010.

The association has set up deadlines for the industry and says all ATMs in the country must be chip and PIN compliant by 31 December 2012, while all merchant terminals must be compliant by 31 December 2015.

Chip cards will continue to carry the magnetic stripe to allow cardholders to use their debit cards in other countries that do not use chip technology.

Mark O'Connell, president and CEO, Interac Association, says: "By putting the power of a computer onto the debit card, chip technology will enhance security and enable new Interac product offerings that continue to keep Canadians connected to their money."

The roll out comes after a pilot of the technology in Kitchener-Waterloo, Ontario, received positive feedback. The major credit card companies, financial institutions, payment processors and merchants all took part in the trial.

A poll of 402 trial participants earlier this year found that 88% of respondents think chip cards are as easy to use as existing magnetic stripe ones, while 85% say the information received from their financial institution about the technology was easy to understand.

A separate poll of 200 merchants found 75% of staff consider processing chip card transactions as easy or easier than magnetic stripe payments.