Chip and PIN seeks to cut fraud

IRELAND is about to close the door on the type of hi-tech credit card fraudsters who swindled €750 million from the British economy last year.

New figures show one in two Irish credit cards have now been upgraded to more secure technology and that the changeover to so-called chip and PIN cards will be complete before the end of the year.

The Irish Payment Services Organisation (IPSO), the banking industry body that handles payments systems, said yesterday that the new cards would dramatically reduce the number of counterfeits. IPSO programme manager Barry O’Mahony said the switch meant Ireland would not be seen as a weak link by sophisticated European gangs.

IPSO research has found that fraudsters pocket up to €20m in Ireland every year. But Mr O’Mahony said Britain’s move to chip and PIN would have left Ireland open to greater incidence of counterfeit cards, as cross-Border criminal gangs switched their activities to countries with weaker security. Britain accounts for more than one-third of all European card fraud.

Over 90% of credit and Laser cards will be replaced by September. The new cards, which will incorporate chips similar to those used on the Eircom-issued phone cards that were common in the 1990s, will be harder to copy.

But they will also do away with the current system of cardholders signing a receipt to authorise a payment. Shoppers will instead be asked to key in a four-digit code when they pay for goods, in the same way as when they withdraw money from bank cash machines. The technology has been used in France for 10 years and slashed fraud there.

Mr O’Mahony said the changeover project would cost €100m but that cardholders would face no additional charges or government stamp duty when their cards are replaced.

But they would need to memorise their four-digit code and could find themselves unable to use their card if they failed to do so, he warned.

The country’s banks will make this easier, by allowing customers to change their code at any cash machine to one that suits them. Mr O’Mahoney warned cardholders to keep their number to themselves and not disclose it to anyone - even in their bank or local shop. They should also make sure not to divulge their code when paying for goods over the internet or by telephone. “No legitimate business will ever ask for it,” he said.