Chip and PIN System
The introduction of Chip and PIN (Personal Identification Number) Verification should help to reduce card fraud. Since 14 February 2006 every credit card issued in the UK has the Chip and PIN verification system except in very specific circumstances, such as if you have a disability and request to continue using signature verification. When you pay for goods and services in person with your credit card, you will enter a four digit PIN to verify that you are the cardholder. This works in the same way as the PIN used to withdraw money from a cash machine / Automated Teller Machine (ATM).
Chip and PIN reduces point-of-sale transaction fraud. A point-of-sale transaction is one when both the cardholder and the retailer are physically present. When you make such a transaction two elements are verified. The first is the authenticity of the card itself, the second is your presence (and therefore authorisation of the transaction).The chip on your card helps to verify the authenticity of the card, whilst the PIN you give verifies that you are the owner of the card. The chip itself communicates with point-of-sale terminals in shops, stores, supermarkets and garages to verify the authenticity of the card, and of the PIN you enter: therefore, it also helps to decide whether or not the transaction is authorised.
In the event that your card is lost or stolen, the criminal would have to know your PIN to make a transaction in person. If they enter a false PIN more than three times the credit card will be 'locked' and can only be unlocked by the card provider or by entering the correct PIN at a cash machine or ATM. Historically a lost or stolen card could be used fraudulently much more easily: the criminal could simply copy your signature to 'verify' that they were the cardholder. This put the onus on the cashier to make sure that the signature was genuine and the cardholder was actually present. Chip and PIN should put technology in charge instead.
You should never reveal your PIN to anybody else, not even bank staff, the police, or people you speak to when making a transaction via telephone. This ensures that criminals will find it difficult to authorise a transaction. It should be noted that Chip and PIN is only available for transactions that you make in person. Any mail order, internet, telephone or fax related purchases will not require a PIN. Therefore, you should protect yourself in other ways (see Online Security Measures).
