A change in the system of credit card payment that will mean cards cannot be taken out of the customer's sight is due to be implemented in two years' time, although few in the industry seem prepared for it, or even aware of the changes.
The cost of card fraud will also shift to the operator rather than the credit card company from the start of 2005.
The hospitality industry is said to be lagging behind the retail sector in its preparations for the UK switch to chip and PIN credit cards. These will replace signatures on paper, with customers keying in their own PINs when paying the bill.
"Although we're finding retailers are aware of the change, we're concerned the message hasn't reached the hospitality sector yet," said Hans Lindh, director of hotels and restaurants Europe at American Express. "The reality is those that aren't prepared will be left exposed because the onus for fraudulent transactions will lie with the individual restaurant or hotel."
Figures from the Association for Payment Clearing Services (APACS), which represents all the major banks and credit card companies, put the cost of credit card fraud at £411.4m during 2001, an annual increase of 30%. Without the new scheme, forecasters predict card fraud will rise to £800m by 2005.
The new system, developed by MasterCard and Visa, is called EMV, and is similar to systems used in the USA and France. EMV requires the cardholder to be present at the time of the transaction, inputting a personal PIN stored on the card's onboard microchip - a process similar to the PIN system already used for debit cards.
The PIN and chip system is expected to be particularly effective in combating the technique known as skimming - where card details are swiped through an electronic reader while out of sight - as the cardholder must be present to input the PIN.
"Any move that protects customers and provides added security has to be a good thing," said Jeremy Probert, of Whitbread. "We're constantly updating our IT in the UK so I'm confident we can meet the 2005 deadline."
A spokesman for the Strictly Hush restaurant in London's Mayfair also welcomed the introduction of chip and PIN. "Using a PIN system has worked very well in France, helping to counter fraud. I'm sure any extra inconvenience the customer suffers will be offset by the added security the system brings."
A trial of the EMV system begins next month in Northampton.
"I suspect most businesses will be fed up hearing about chip and PIN by 2005," said Sandra Quinn at APACS.
Further information can be found at www.chipandpin.co.uk.
By Chris Druce
Source: Caterer and Hotelkeeper magazine, 13-19 February 2003