Question: What is Chip and Pin?

Gary Hocking: It is a new way to pay with cards to help protect them from the fraudster. The chip refers to the microchip that you'll find embedded on all your cards and the PIN refers to your personal identification number.

Cardholders don't need to do anything - card issuers will be in touch with full instructions when you are to be issued one of the new cards. Once you have a card the only real change is that instead of giving a signature when paying by plastic you'll be asked to tap in a PIN in much the same way as you do at cash machines.

The "chip" or microchip embedded on your card will do the job of the magnetic stripe of storing cardholder information only much more securely.

Question: Why hasn't Chip and PIN been introduced before?

Gary Hocking: It has taken a long time to put in place a global standard. We were very keen that customers in the UK would get the same level of security wherever they were going.

We have been working with the other card issuers all over the world since the middle of 1990s to put this in place. And we are now ready to do that, as are most of those other countries. this includes those countries who have been using older versions of the technology who will also be upgrading.

Question: What effect has credit card fraud had on the UK economy?

Gary Hocking: I can't say for the economy as a whole but I can speak for our industry; where we currently loose more than £400 million pounds every single year. This is more than ten pounds for every single one of our customers and is money that is generally ending up in the hands of organised gangs who use the money to fund more serious crime.

Question: When and where will Chip and PIN first start?

Gary Hocking: It has already started but it isn't starting in any one place. To do that would make the fraudsters life rather easy because they would just continue to move around the country wherever we haven't reached yet, so we are doing it equally all over the country at the same time.

Already there are nearly 2 million cards out there and there are getting on for a 100,000 point-of-sale terminals, so it has already started but because we are spreading it very thinly across the country as a whole at the start its not that noticeable at the moment.

Question: Are all credit card companies involved?

Gary Hocking: Every single one and debit cards too.

Question: What is the cost of setting it up, will the cost just be picked up by the credit card industry or will the consumer pay?

Gary Hocking: The one party that isn't paying is the consumer; the cost is being entirely borne by banks and retailers.

Question: Are all retailers signed up?

Gary Hocking: Small retailers will have their equipment supplied to them direct by their banks so they won't need to do anything. There are 400,000 small retailers in the UK.

Larger retailers, and there are less of these, generally own their own point of sale equipment and are currently engaged in discussions with their banks, but these are commercial negotiations and they take time, so although many of them are currently signed up there are still many to go.

Question: When will all transactions be Chip and PIN?

Gary Hocking: Well that will never be the case as there will all be a small minority of transactions either through foreign customers whose countries still haven upgraded yet, or from disabled customers who continue to use signature. But most transactions we expect to be Chip and PIN during 2005.

Question: What penetration do you expect to be the maximum and by when?

Gary Hocking: One hundred percent of cards issued in the UK except for those disabled customers. On the terminal side it will be somewhere in the high nineties in percentage terms. We expect the vast majority of transactions to be taking place sometime in 2005.

Question: How will shoppers know when they have to start using this new system?

Gary Hocking: They will be prompted automatically whenever they buy goods, but when they receive a new pin card for the first time then they will be advised by two or three letters rather than just one by their bank. But at the time of the transaction if the equipment recognises that this should be a Chip and PIN transaction then it tells the customer and retailer to do so.

Question: How will you be helping customers to understand when they need to sign and when they need to use a PIN?

Gary Hocking: We have a massive communications campaign all the way though 2004 so banks and retailers will be talking to their customers individually but also, through programme management organisation. We also have a TV campaign planned which starts in the first half of the year and continues pretty much all the way through the rest of the year.

Question: Do people have to use Chip and PIN?

Gary Hocking: Obviously we need to recognise the need for disabled people as a specific case. People who cannot use a pin but can use a signature will get signature cards. But if we were to extend that as an option to all customers then all the fraudsters would very quickly become signature cardholders and we would never solve the fraud problem.

Question: What has been the role of the government in introducing the scheme?

Gary Hocking: The government and in particular the Home Office has been very supportive all the way along. It started with Charles Clarke when he was the minister of the Home Office through to John Denham and now Hazel Blears who have all been very very supportive.

They also provided us with a forum in which banks and retailers could begin the discussions and they have been very generous in offers in helping us with legislation and so on.

Question: Have they been involved in helping introduce any of the technology or bear any of the costs?

Gary Hocking: Not specifically because all of the costs and all of the development work has been done in the commercial sector and has been done by banks and retailers. But just having that government support is invaluable.

Question: What do you think of the idea of ID cards and incorporating financial services on them? I.e the ID card bearing the financial details or verifying further who you are?

Gary Hocking: The general attitude of the banking sector to ID cards has been that it is a political issue and therefore as companies we don't take a view. What banks would find useful is some highly secure method of identifying customers because at the moment the money laundering regulations mean we have to rely on sources of paper identification.

So if that could be replaced by a single card then that in it self would be useful. But in terms of combining the payment product with the ID card that doesn't seem like something our customers are demanding as far as we can tell.

Question: Is money becoming virtual - Due to the increased use of credit cards, reduction in the use of cheques, and even the suggestion that cheques will become obsolete? Are we becoming more than ever a cashless society? Can you envisage this?

Gary Hocking: We are using cash less but we are a long way off from being a cash less society. The number of cheques that are written continues to fall year on year and in terms of card payments we are expecting something like a third of card payments to be either over the internet or using the telephone within the next three or four years.