Britain's revolution at the retail POS

The UK is in the midst of a massive upgrade of its card payments infrastructure from magnetic stripe based signature cards to smart cards authenticated using PIN's. Richard Rolfe reports on this change.

The main reason for the change is the dramatic rise in card fraud. Fraud levels are estimated to have tripled in just six years, according to the London-based Association for Payment Clearing Services (APACS), the British banking industry trade group (chart, page 24). And some observers believe they could nearly double again in about three years. Experts attribute the higher losses to more Internet fraud, application fraud, and counterfeiting.

As the article points out, rule changes provide the economic incentive for merchants to upgrade their POS terminals. A 10-basis point reduction in card acceptance fees coupled with a shift in responsibility for liability to merchants in the event back-level POS acceptance devices are used both provide the business case for merchant adoption.