Barclays bank is sending out handheld chip and PIN card readers to more than half a million online banking customers in a bid to prevent fraud.
The bank’s move – the first of its kind in the UK – follows the release of figures from UK payments association Apacs showing that the amount stolen by online banking fraudsters has shot up by 44% in a year, from £23.2m in 2005 to £33.5m last year.
But losses from payment card at UK retailers – where chip and PIN technology is now widely used as an anti-fraud measure – have fallen sharply, dropping by 47%. Barclay’s move is an attempt to harness the familiar retail store technology to tackle fraud in online banking.
Small and medium-sized enterprise customers and individual account holders will be asked to use the “PINsentry” devices to verify their identity – using their debit card and usual PIN number – when they log in to their accounts and when making certain types of payments.
Barclays director for electronic banking, Barnaby Davis, said: “PINsentry is the next generation of fraud prevention technology and Barclays is proud to be the first organisation in the UK to roll it out to its customers.”
The chip and PIN devices, which will replace passwords, will be rolled out in the second half of this year to SME and individual customers setting up third-party payments to recipients other than standard suppliers and to premier banking customers.
Other customers would be switched to the PINsentry system “as and when it is needed for their online banking activity”, Barclays said. Those who use online banking simply to view account details and pay bills to standard suppliers such as utility firms would not need to use the devices.
The PINsentry machines have been designed to industry standards set by Apacs.