New hi-tech security to ease care users worries

NEW security technology in credit and Laser cards should soon ease consumer worries in the wake of the Penneys duplicate charging episode, leading retailers said yesterday.

So-called “chip and PIN” technology will reduce the potential for transactions being processed twice when it is introduced on a phased basis over the next 12 months.

The new set-up, which will involve all credit and Laser cards being fitted with a smart chip, will replace the current procedure where cardholders sign a slip after their card is swiped. Shoppers will instead key in a PIN at checkouts and counters in the same way as when they use bank cash machines.

The Irish Payment Services Organisation (IPSO), the bank-sponsored group responsible for introducing the new technology, declined to comment specifically on Penneys’ apology for overcharging customers, but said the new technology would benefit both retailers and shoppers by increasing the level of automation involved in making payments and reducing the potential for fraud.

The new technology is on trial in the Kildare towns of Naas and Newbridge and will cost almost €100 million. IPSO said more than 90% of credit card transactions would involve chip-based cards by July 2005, while the 90% threshold would be reached by Laser debit cards by the following September.

There are 2.1 million credit cards and 1.1 million Laser cards in circulation in Ireland at present.

More than 37,000 card readers will be changed to facilitate the new arrangements.

IPSO said a key benefit for consumers was that money could only be taken from their accounts if they keyed in their PIN to authorise a payment. A card cannot be used by a third party if lost or stolen, unless details of the relevant PIN are kept with the card.

A number of retailers said yesterday that they were confident that the duplicate charging uncovered at Penneys was an isolated case. Tesco said their internal procedures required checkout operators and store management to verify transactions and ensure that payments had been processed properly. Cash management controls aimed to prevent both errors and fraud, the retailing giant said.