Chip-and-PIN target too close for comfort

PMO remains optimistic as banks admit migration schemes will go into 2005

The Chip-and-PIN Programme Management Organisation (PMO) says the vast majority of the UK's 42 million cardholders should be using chip-and-PIN cards by the end of 2004, but as the deadline approaches, its goal is starting to look unlikely.

Lloyds TSB and Halifax Bank of Scotland (HBOS) say most of their customers will be chip-enabled by that time, but both banks have conceded that it will probably be mid-2005 before they can update all of their cardholders.

Barclays and Royal Bank of Scotland (RBoS) expect to have the majority of their customers moved by the end of 2004, but both will stretch into 2005 to complete the migration.

And HSBC has confirmed that it will take two years before it can move its 6 million customers to chip-based cards, with its rollout programme only expected to conclude by the end of 2005.

HBOS plans to start its chip-and-PIN rollout in the first quarter of next year and expects that it will take around eighteen months to refresh its debit card customer base with new cards.

'We've got quite a short period to get cards out to our 8m-strong debit card customer base. We will have quite substantial monthly volumes to push out to our customers, which we plan to have done by mid-2005,' said HBOS's manager for service and delivery strategy banking John Capper.

'We've been through the scoping and design phases and we'll move into the implementation stage early next year,' he said.

HBOS signed a three-year contract with smart card supplier Gemplus last month for 15m chip-based cards.

But the PMO says things are going ahead well.

'We've already made fantastic progress. There's more than a million new cards out there already and we are still on target to get one in five cardholders with a chip-and-PIN by Christmas,' said a PMO spokeswoman.

Abbey says it will have replaced its 4.5m debit card customers with new cards by the end of 2004, while its internet-based subsidiary Cahoot says it has been issuing chip-based cards since July.

Abbey is issuing its customers with new cards as their old ones expire or are lost, a process that has been accelerated by shortening the expiry date on many of its customers' cards, ensuring that the replacement cycle falls within the planned timeframe.

'We believe that chip-and-PIN is something customers will welcome, and we anticipate substantial long-term savings through reduced card fraud,' said Abbey's ATM systems manager Andy Sampson.

The bank recently completed an extensive testing programme using tools from smart card software provider Aconite to ensure that its cash machines and point of sale terminals would work as expected with the new cards.

Last month, Diners Club revealed that it would delay the introduction of chip-and-PIN cards for its customers, as it believes that its existing anti-fraud mechanisms are strong enough for the moment.

Banking on chip-and-PIN

Bank, cards in issue, expected completion

Abbey, 4.5 million*, End of 2004 Barclays, 18.8 million, 80 per cent by end 2004 HBOS, 8 million*, Mid-2005 HSBC, 6 million*, End of 2005 Lloyds TSB, 13 million, 80 per cent by end of 2004 RBS, 22 million, Majority by end-2004 *Debit cards only