`Smart' payment cards to go on trial next year

Trials of "smart" payment cards are to take place next October in Bristol, Edinburgh and Northampton as a prelude to a full-scale launch of the anti- fraud device in 1998.

The Association of Payment Clearing Services said yesterday that as many customers as possible would be brought into the public trials in the three cities, which will use new cards with micro-chips embedded in them instead of a magnetic strip. Large retailers would be asked by banks to install trial terminals.

The chips are so powerful they could incorporate detailed data that would allow the introduction of biometric methods of checking the holders' identity and preventing fraudulent use.

These methods include retina scanning and sophisticated signature verification techniques, which would be programmed into the chip for each customer.

But Apacs said that nobody had yet come up with a biometric test that was accurate enough for the banking system. Eryl Thomas, head of Apacs clearing services, said the tests gave too many false readings, in which honest customers were wrongly rejected.

He said: "We don't see anything in the market that will fulfil the criteria we have set. If people tell you that biometrics is 99.7 per cent accurate it sounds good but it means that each day there are 15,000 dissatisfied customers and probably at least 15,000 staff embarrassed and extremely unhappy."

What he called the "insult rate" of false rejections would have to be reduced to one in 100,000 before biometrics could be used on the chips, whose principle immediate advantage is that they are much harder to forge.

Apacs said that if the public trials of the chips were successful, the issue of 90 million credit, debit, charge and cash machine cards would begin in 1998, at a cost expected to be pounds 1.50 per card. The UK's 20,000 cash machines and 400,000 retail terminals will also have to be upgraded.

Apacs gave its backing to retailers' complaints about the date for introducing notes and coins in the new euro if Britain joins monetary union, which has been set for 1 January 2002, in the middle of the January sales. Apacs preferred the previous October.