August 5, 2003. Copyright 2003. Graphic News. All rights reserved.

UK slow to cut credit card fraud

LONDON, August 5, Graphic News: Credit card fraud in Britain has trebled to £425 million over the last decade and is expected to almost double again by 2005.

This is in contrast to France, where the introduction of Òsmart chipsÓ and PINs (personal identification numbers) for credit and debit card purchases over the same period have resulted in fraud losses being more than halved.

One reason for the slow improvements in security is the size of the UK market. The Association for Payment Clearing Services (APACS), which represents the interests of banks and building societies, says there are around 137 million cards in circulation in Britain; more than in the rest of Europe combined. 

Additionally, the card industry is fragmented with more than 60 different issuers, none of whom relish footing the £1 billion bill for re-equipping 850,000 point-of-sale terminals and issuing the new microchip cards. But APACS say smart chip cards will be introduced within two years.

British banks are so keen to gain new plastic-card customers that they go to extraordinary lengths. This was highlighted last week when the Royal Bank of Scotland offered a card with a £10,000 limit, and the chance to earn air miles, to a resident of of Cheadle Heath, near Manchester with no credit history, no income, and no assets. The prospective customer was a dog called Monty. The Royal Bank apologised for the error.

Canines aside, British shoppers use credit cards to spend £103 billion annually and owe approximately £31 billion in overdue balances. This is typically charged at between 17.9% and 25% -- more than six times the base rate.

/ENDS
Sources: APACS, Economist