Safeway is to be the first UK retailer to introduce chip and PIN technology at the point-of-sale under a national conversion programme aimed at clamping down on signature-based card fraud.
Safeway has commissioned IBM to implement the system based on EMV (Europay, Mastercard, Visa) chip card technology across the majority of its 500 UK stores by the end of 2002.
Chip cards are set to replace the common magnetic swipe card in the UK over the next three years so that by 2005, all face-to-face credit and debit card transactions will need to be authorised by a customer keying in a personal identification number (PIN). This new type of payment method is expected to reduce plastic card fraud in the UK by up to 75 per cent.
Colin Grannell, managing director, Visa UK, says that Visa member banks have already issued over 20 million chip cards to UK consumers. "We estimate that at least 80% of payment cards will be both chip and PIN-based by mid 2004," he says.
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 amongst a selected number of retail outlets. Building on the success of this initial trial, Safeway is now working with IBM to deploy 8000 fully operational chip card terminals by Christmas 2002 in almost all of its stores.
David Figg, retail consultant, IBM, adds: "Now that the right technology infrastructure is in place, the banking industry can start educating both retailers and consumers."
He says IBM will work with business partners Ingenico to provide the chip card readers and STS for the data processing software as a fully-integrated extension to Safeway's existing payments infrastructure.