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How chip and PIN reduces fraud

The magnetic stripe and signature has been used on plastic cards since 1972 but they no longer provide the only form of security. Chip and PIN has made payments more secure and dramatically reduced fraud losses on UK cards.

There are two elements involved in making a plastic card transaction secure. The first is to ensure that the card is genuine; the second is that the person presenting the card is the true owner. Chip does the former and PIN does the latter. The chip therefore protects against counterfeit fraud and the PIN against lost and stolen cards and those intercepted in the post.

Card issuers and retailers have invested over 1 billion to migrate from magnetic stripe technology to microchip technology. The majority of the UK's ATMs, 140 million debit and credit cards and 860,000 point-of-sale terminals have now been upgraded, and more than 99.8% of all chip and PIN card transactions are now PIN-verified. The UK now has more than 58,000 cash machines, which are all chip enabled.