HSBC opts out of home Chip and PIN

Bank's decision could lead to more fraud, according to payments agency

Andrea-Marie Vassou, Computeract!ve 14 May 2007

HSBC’s decision not to supply customers with Chip and PIN systems they can use at home could make them more likely to be targeted by fraudsters, the UK payments agency APACS has warned.

The warning follows the news that every big bank, apart from HSBC, has plans to combat fraud by providing their online customers with Chip-and-PIN devices to use in the home.

The devices will work by asking users to identify themselves when banking online before any money can be taken from their accounts.

However, APACS has suggested that the bank's exclusion may result in it being targeted by fraudsters who will be drawn to the fact that there is no home Chip-and-PIN protection on customer’s accounts.

Mark Bowerman, spokesman for APACS, told Computeractive: “It’s up to HSBC to decide whether or not they want to implement home Chip-and-PIN numbers into its plans - it might feel that the existing security it has in place is adequate.

“However, the bank might change its mind when it sees the roll out by others. It might [also] experience fraud as fraudsters [decide to] migrate,” he said.

However, Tim Pie, a spokesman for HSBC, defended the bank's decision not to implement the second factor authentication procedure.

“We have considered the subject of home Chip and PIN for the past year but currently do not see any need for it as our online losses are minimal. We have lower incidents of fraud than other banks,” he told Computeractive.

This he put down to a number of factors including customer education on fraud and the fact that the bank gave discounts for a range of security software.

“The majority of cases of card fraud are done through card-not-present fraud, which will not prevented by the [home Chip and PIN] device.” he said. “We will, however, continue to monitor our systems and consider putting something in place in the future if we need to."

Last month Barclays announced plans to give its account holders the PINsentry, a calculator-style gadget which, once users have inserted their debit card into it, will produce a randomly generated number which they will have to key in as well as their usual passwords and identification numbers.

A similar scheme is likely to be used by both Natwest and Nationwide. Lloyds TSB has also said its customers will be issued with a keyring-style device with an inbuilt chip, which will also work in a similar way.

However, many others banks have been slow in coming forward with their announcements. This, according to Mr Bowerman, is because many are still drawing up their plans.

“It’s not that banks have kept it quiet - it’s more of a case that they have not yet been able to disclose plans until they are firmed up,” he said.

Bowerman, he predicts will be around summer and autumn time.

“It is up to each individual bank to decide when they take out such precautions as there are no mandatory guidelines for this in place."

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