The Whys and Wherefores The Whys and Wherefores of Chip & PINof Chip & PINA brief explanation of the A brief explanation of the

technology and the technology and the operational implications of operational implications of

Chip & PINChip & PIN

Where are we now?Where are we now?

• The Credit Card industry is being The Credit Card industry is being defrauded to the tune of £400million defrauded to the tune of £400million per yearper year

• Credit Card companies shoulder the Credit Card companies shoulder the burden of the loss burden of the loss

• Current technology uses the magnetic Current technology uses the magnetic stripe on the Credit Cardstripe on the Credit Card

What About the Future?What About the Future?

• Credit Card fraud will increaseCredit Card fraud will increase– It is estimated that it will reach It is estimated that it will reach

£800million per year by end 2004£800million per year by end 2004

• The losses will reach a level where The losses will reach a level where the Credit Card companies will cease the Credit Card companies will cease to be able to operateto be able to operate– No more credit card sales! How would No more credit card sales! How would

that affect you?that affect you?

What is the Solution?What is the Solution?

• Obviously something has to be done!Obviously something has to be done!

• Enter technology…Enter technology…– In the guise of Chip & PINIn the guise of Chip & PIN

• This technology aims toThis technology aims to– Cut the level of fraud drasticallyCut the level of fraud drastically– Increase card securityIncrease card security– Give peace of mindGive peace of mind

So What is Chip & PIN?So What is Chip & PIN?

• This is divided into two partsThis is divided into two parts– ChipChip

• Each credit card will have a microchip Each credit card will have a microchip embedded on the card – indeed some are embedded on the card – indeed some are already availablealready available

– PINPIN• Personal Identity Number – this allows one Personal Identity Number – this allows one

to authorise the card’s useto authorise the card’s use• This is entered at the point of paymentThis is entered at the point of payment

What does the Chip do?What does the Chip do?

• The microchip embedded on the card is The microchip embedded on the card is

dynamicdynamic

– It can be read from and written toIt can be read from and written to

• It is very heavily protected by encryptionIt is very heavily protected by encryption

– It is very hard to defraud using this type of cardIt is very hard to defraud using this type of card

• It will allow the Credit card companies to It will allow the Credit card companies to

keep goingkeep going

What is the Purpose of the PIN?What is the Purpose of the PIN?• The PIN enables the cardThe PIN enables the card• It is more secure because -It is more secure because -

– Only the card user knows itOnly the card user knows it– The card never leaves the owner’s possessionThe card never leaves the owner’s possession– The payment terminal is shielded to prevent The payment terminal is shielded to prevent

others accessing informationothers accessing information

• The card cannot be copied as Magnetic The card cannot be copied as Magnetic Stripe cards can, and even if it could – the Stripe cards can, and even if it could – the PIN would not be available PIN would not be available

• If the card is stolen, it cannot be used If the card is stolen, it cannot be used without the PINwithout the PIN

How does it Work?How does it Work?

• The card reader is The card reader is customer facingcustomer facing

• It is attached to the It is attached to the PoS by shielded PoS by shielded cablecable

• The sale is rung up The sale is rung up and the terminal and the terminal given to the given to the customercustomer

How does it Work?How does it Work?

• The customer The customer

inserts the cardinserts the card

• The unit then gives The unit then gives

instructions to instructions to

followfollow

How does it Work?How does it Work?

• The customer then The customer then inputs the PINinputs the PIN

• If everything is all If everything is all right – the sale is right – the sale is completedcompleted

• If there is a If there is a problem – the problem – the customer is notified customer is notified by the unitby the unit

How does it Work?How does it Work?

What are the Benefits?What are the Benefits?

• So far we’ve talked about the benefits to So far we’ve talked about the benefits to the Credit Card companies – what are the the Credit Card companies – what are the benefits to the retailer?benefits to the retailer?– The banks are offering a small reduction in The banks are offering a small reduction in

acquirer feesacquirer fees– The retailer will be shielded from any fraudThe retailer will be shielded from any fraud

• Come 1Come 1stst January 2005, the retailer will be January 2005, the retailer will be responsible for any fraud if they are not responsible for any fraud if they are not Chip & PIN compliant!Chip & PIN compliant!

Responsible for Fraud?Responsible for Fraud?

• Currently if someone uses a stolen card, Currently if someone uses a stolen card, the bank carries that debt – the retailer still the bank carries that debt – the retailer still gets paidgets paid

• From 1From 1stst January 2005, any fraud will be January 2005, any fraud will be charged back to the retailer if they are not charged back to the retailer if they are not Chip & PIN compliantChip & PIN compliant

• Remember – card fraud will be running at Remember – card fraud will be running at £800million pounds per year by then!£800million pounds per year by then!

Responsible for Fraud?Responsible for Fraud?

• The fraudsters will review their tactics The fraudsters will review their tactics in the light of thisin the light of this– They will target those retailers who are They will target those retailers who are

not Chip & PIN compliantnot Chip & PIN compliant

– The fraud will migrate to those still only The fraud will migrate to those still only able to accept magnetic stripe cards, able to accept magnetic stripe cards, and they will have to accept the loss!and they will have to accept the loss!

Points to NotePoints to Note

• Is your current system Chip & PIN Is your current system Chip & PIN compliant?compliant?

• If not, are there any plans to make it so?If not, are there any plans to make it so?• Bear in mind that it took BCP 3 months to develop Bear in mind that it took BCP 3 months to develop

the software and a further 3 months to get the software and a further 3 months to get accreditation from the banksaccreditation from the banks

• BCP were one of the first in the queue – the time BCP were one of the first in the queue – the time required for accreditation is now significantly required for accreditation is now significantly longer, and will get longer still as more companies longer, and will get longer still as more companies apply – some people are going to miss the boat!apply – some people are going to miss the boat!

Points to NotePoints to Note

• Is your PoS hardware capable of Is your PoS hardware capable of taking Chip & PIN cards?taking Chip & PIN cards?– Remember that Chip & PIN needs a Remember that Chip & PIN needs a

terminal to make it work – can your terminal to make it work – can your current supplier assure you that they current supplier assure you that they have one that is compliant?have one that is compliant?

• BCP already have done this work and BCP already have done this work and have the solutionshave the solutions– Can your current supplier say the same?Can your current supplier say the same?

What can BCP Offer?What can BCP Offer?

• BCP can offer –BCP can offer –

– A Chip & PIN solution as an integral part A Chip & PIN solution as an integral part

of their PoS software packageof their PoS software package

– A standalone Chip & PIN solutionA standalone Chip & PIN solution

– Advice on the requirements of Chip & Advice on the requirements of Chip &

PINPIN

Come On InCome On In

• Have a look around our websiteHave a look around our website

www.bcpsoftware.comwww.bcpsoftware.com– Check out the software offeringsCheck out the software offerings

– Look at the customer profilesLook at the customer profiles• Remember – these customers will be Chip & PIN Remember – these customers will be Chip & PIN

compliant by the end of 2003compliant by the end of 2003

• Will you be Chip & PIN compliant by then?Will you be Chip & PIN compliant by then?

• If you have any questions – please contact If you have any questions – please contact us – we’ll be happy to helpus – we’ll be happy to help

How to Contact UsHow to Contact Us

Telephone : 0161 355 3000Telephone : 0161 355 3000

Ask for Retail SalesAsk for Retail Sales

Fax : 0161 355 3001Fax : 0161 355 3001

E-mail : Retail@BCPSoftware.comE-mail : Retail@BCPSoftware.com