Tesco warning on chip and PIN cost

Mid-sized retailers could face an annual bill of up to£3 million if they are not prepared for the January 2005 chip and PIN implementation deadline.

Nick Mourant, divisional director of Tesco's treasury, said that while the largest 25 retail groups will be fully prepared for the changeover and small retailers will have bank-owned card terminals updated automatically, the middle 10,000 retailers risk not being ready for the shift in liability that will accompany the transition.

He warned: 'Be certain that fraud will shift to the weakest link in the chain, and this is most likely to be the middle tier of retailers with integrated kits, but with low awareness of the task ahead. I estimate that there is a£1 million hit coming to your bottom lines, and for those companies with a card turnover of£1 billion in high fraud areas, such as electricals or jewellery, you have a£3 million risk coming your way.'

Mourant said that if Tesco did not have chip and PIN security measures in place by the deadline, taking liability for fraudulent 'card present' transactions from the banks would theoretically cost it£6 million a year, on a total card spend of£10 billion.

BRC deputy director-general Mark Bradshaw urged banks to improve communication with the 'at-risk' retailers.

Both were speaking at the Retail Week Chip and PIN Conference.