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Many UK retailers won't make smart card deadline
Migration to new technology both complex and costly

By Sylvia Carr

Published: Tuesday 18 May 2004

More than a quarter of UK retailers are wary of moving to the latest Chip & PIN smart card technology for plastic card transactions, according to a survey conducted by Retail Logic, a maker of payment processing software, and the Retail Bulletin, a retail news website.

Of the companies surveyed, 26 per cent said they remain unconvinced of the benefits of changing to the new systems.

The survey concentrated on a range of retailers, from those with fewer than 10 stores to those with over 250.

The deadline for converting UK shops to smart card transactions is 1 January 2005, which would make the UK the first country to move to Chip & PIN systems that meet the EMV (Europay-MasterCard-Visa) standard. Ireland and France are also in the process of upgrading to the new standard.

Smart cards are touted as being harder and more expensive to duplicate than magnetic-strip cards, so using them could cut down on fraud. In addition, the chip technology on smart cards allows their data to be changed and allows them to be used not just for payment but also for loyalty and frequent shopper programmes.

As for who will make the deadline, the survey revealed 53 per cent of retailers expect to be ready by January 2005, while 26 per cent will make it by June 2005 and 21 per cent sometime after that. Given that 20 per cent of retailers are putting off the migration until their next point-of-sale hardware upgrade, the migration for all UK retailers may not be complete until 2010.

What's holding back the switch?

Retailers surveyed cited four major reasons: the complexity of the accreditation process (28 per cent), lack of guidance from banks (28 per cent), technical issues (24 per cent) and lack of resources (20 per cent).

The cost of the migration will also be high, with the majority of respondents (53 per cent) estimating they'll spend between £100,000 and £500,000.