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The Whys and Wherefores of Chip & PIN

The Whys and Wherefores of Chip & PIN. A brief explanation of the technology and the operational implications of Chip & PIN. Where are we now?. The Credit Card industry is being defrauded to the tune of £400million per year Credit Card companies shoulder the burden of the loss

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The Whys and Wherefores of Chip & PIN

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  1. The Whys and Wherefores of Chip & PIN A brief explanation of the technology and the operational implications of Chip & PIN

  2. Where are we now? • The Credit Card industry is being defrauded to the tune of £400million per year • Credit Card companies shoulder the burden of the loss • Current technology uses the magnetic stripe on the Credit Card

  3. What About the Future? • Credit Card fraud will increase • It is estimated that it will reach £800million per year by end 2004 • The losses will reach a level where the Credit Card companies will cease to be able to operate • No more credit card sales! How would that affect you?

  4. What is the Solution? • Obviously something has to be done! • Enter technology… • In the guise of Chip & PIN • This technology aims to • Cut the level of fraud drastically • Increase card security • Give peace of mind

  5. So What is Chip & PIN? • This is divided into two parts • Chip • Each credit card will have a microchip embedded on the card – indeed some are already available • PIN • Personal Identity Number – this allows one to authorise the card’s use • This is entered at the point of payment

  6. What does the Chip do? • The microchip embedded on the card is dynamic • It can be read from and written to • It is very heavily protected by encryption • It is very hard to defraud using this type of card • It will allow the Credit card companies to keep going

  7. What is the Purpose of the PIN? • The PIN enables the card • It is more secure because - • Only the card user knows it • The card never leaves the owner’s possession • The payment terminal is shielded to prevent others accessing information • The card cannot be copied as Magnetic Stripe cards can, and even if it could – the PIN would not be available • If the card is stolen, it cannot be used without the PIN

  8. How does it Work? • The card reader is customer facing • It is attached to the PoS by shielded cable • The sale is rung up and the terminal given to the customer

  9. How does it Work? • The customer inserts the card • The unit then gives instructions to follow

  10. How does it Work? • The customer then inputs the PIN • If everything is all right – the sale is completed • If there is a problem – the customer is notified by the unit

  11. How does it Work?

  12. What are the Benefits? • So far we’ve talked about the benefits to the Credit Card companies – what are the benefits to the retailer? • The banks are offering a small reduction in acquirer fees • The retailer will be shielded from any fraud • Come 1st January 2005, the retailer will be responsible for any fraud if they are not Chip & PIN compliant!

  13. Responsible for Fraud? • Currently if someone uses a stolen card, the bank carries that debt – the retailer still gets paid • From 1st January 2005, any fraud will be charged back to the retailer if they are not Chip & PIN compliant • Remember – card fraud will be running at £800million pounds per year by then!

  14. Responsible for Fraud? • The fraudsters will review their tactics in the light of this • They will target those retailers who are not Chip & PIN compliant • The fraud will migrate to those still only able to accept magnetic stripe cards, and they will have to accept the loss!

  15. Points to Note • Is your current system Chip & PIN compliant? • If not, are there any plans to make it so? • Bear in mind that it took BCP 3 months to develop the software and a further 3 months to get accreditation from the banks • BCP were one of the first in the queue – the time required for accreditation is now significantly longer, and will get longer still as more companies apply – some people are going to miss the boat!

  16. Points to Note • Is your PoS hardware capable of taking Chip & PIN cards? • Remember that Chip & PIN needs a terminal to make it work – can your current supplier assure you that they have one that is compliant? • BCP already have done this work and have the solutions • Can your current supplier say the same?

  17. What can BCP Offer? • BCP can offer – • A Chip & PIN solution as an integral part of their PoS software package • A standalone Chip & PIN solution • Advice on the requirements of Chip & PIN

  18. Come On In • Have a look around our website www.bcpsoftware.com • Check out the software offerings • Look at the customer profiles • Remember – these customers will be Chip & PIN compliant by the end of 2003 • Will you be Chip & PIN compliant by then? • If you have any questions – please contact us – we’ll be happy to help

  19. How to Contact Us Telephone : 0161 355 3000 Ask for Retail Sales Fax : 0161 355 3001 E-mail : Retail@BCPSoftware.com

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