Fleet News

Fuel card providers lagging behind over chip and PIN

FUEL card providers are lagging behind high street banks in the introduction of new technology to tackle fraud – but they insist they will soon catch up.

A massive national campaign has been launched to introduce chip and PIN technology to every payment card in the country, from credit cards to debit cards.

The changes mean that instead of providing a signature as proof of identify when purchasing goods, the card-holder simply types in a unique four-digit code.

The cost of introducing the technology is a key reason why fuel card suppliers have not introduced the system, opting instead for magnetic strip pin cards.

But Doug Patton, card manager at Total UK, believes some providers will eventually follow in the banks' footsteps and offer fleets the new, more fraud-resistant system.

He said: 'The type of chip cards issued by banks work with terminals developed with what are known as ENV2 chips and have a European standard.

'It is expensive to put in the infrastructure for chip cards. When service stations have the facility to read them, then oil companies will start to introduce chip fuel cards.

'But for oil companies to issue chip cards now, they would need to make an investment in the infrastructure. I think two or three years down the line we will see chip and PIN fuel cards.'

Arval PHH plans to introduce chip and PIN cards within the next two years and Mike Norton, head of business development for risk at Arval, believes cost is not the main priority.

He said: 'Costs have come down and I anticipate they will come down further. Terminal upgrades are the main factor as technology upgrades are needed at sites.'

Total has introduced a pin-verified card that uses a magnetic strip on the back, which also requires a number to be typed in. However, the card cannot hold as much information as one containing a chip.

Patton said: 'From our experience in Europe, where we use chip and pin cards, because of the additional cost of introducing chips, the case is not justified. Most security aspects you can gain from using a pin alone.'

Esso will also be following the same route, opting for PIN-protected swipe cards rather than ones containing a chip.

An Esso spokeswoman, said: 'We have got new equipment and may be rolling out a PIN system by the end of the year but we have no deadlines for this. We will not be having chip cards.'

However, choosing chips can offer fleets additional opportunities in terms of the parameters which can be set for each transaction.

Chip cards can be set with information such as times when the card can be used, where it can be used and how much fuel can be purchased. But Patton believes that too much information can provide additional problems.

He said: 'If a fleet driver goes to fill up at 6.01pm and the card is set until 6.00pm, they would not be able to fill up.

'While in the future there may be advantages from chips on fuel cards, the first step is to get increased security through PINs.

'Magnetic strip PIN cards give the most benefit without the infrastructure costs,' Patton said.

BP also believes that fuel card providers are restricted with chip and PIN cards due to associated costs.

Steve Riggens, marketing manager for fleet services at BP, said: 'We recognise that security and control are concerns and there are benefits for improving security.

'Chip and PIN is something we would consider but although the roll-out of credit cards is happening now, it won't be in the near future for fuel cards, mainly due to the cost of infrastructure and the cost of the actual cards.'

Chip and PIN history

  • Banking and retail industries first introduced the chip and pin system in May 2003 during a three-month trial in Northampton
  • It is now expected that by 2005 most credit card and debit card transactions will be verified by the customer keying in a PIN number rather than signing a paper receipt
  • Figures from www.chipandpin.co.uk have shown that more than £424 million worth of fraud was committed on UK cards in 2002 and the site predicts that if chip and PIN is not introduced, UK losses will escalate to £800m by 2005
  • One in three people have been affected by fraud
  • £424.6 million was lost through plastic fraud in 2002
  • A fraudulent transaction takes place every eight seconds
  • Fraud using counterfeit cards accounted for about £150 million of the total and lost and stolen cards accounted for more than £108 million of the losses in 2002
  • One of the largest fraudulent transactions on a counterfeit card was for just under £40,000 for a car

    Anti-theft revolution is sweeping the high street

    ALTHOUGH the chip and PIN revolution has yet to affect the fuel card industry, it is sweeping across the high street.

    According to industry experts, there are more than eight million PIN-enabled cards now in circulation in the UK, despite the system only launching in October 2003.

    That means one in six cards now use the system, which is claimed to increase security and help to prevent fraud. About 100,000 businesses have started accepting the cards.

    The Association for Payment Clearing Services reckons that in 2002, plastic card fraud in the UK amounted to about £424.6 million, a significant increase on 2001, which saw the figure reach £411.5 million.

    The chip and PIN system will be rolled out completely by 2005 and is part of an international programme to combat the problem of card fraud.

    France, which introduced the system 10 years ago, has seen an 80% reduction in the amount of fraud after introducing chip and PIN.

    Chris Pearson, chief executive of APACS, said: 'Enough is enough – we've seen plastic card fraud rise for several years and that's why the UK's banks, building societies, retailers and card issuers have come together to introduce the chip and PIN solution.

    'More than £1million worth of card fraud is committed every day – that's a fraudulent transaction every eight seconds. Chip and PIN will wipe the smile off the faces of UK fraudsters.'

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