UK airlines prepare for chip and PIN

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The opportunities offered by a secure system of credit card payment outweigh compliance costs, UK inflight retailers tell DFNI in our July 1 issue

UK airlines are adapting to new legislation over credit card payments. From January 1 2005 retailers who do not use the chip and PIN card system, whereby signatures are replaced with a six-digit personal identification number, will be held responsible for card fraud instead of the card provider. The system requires new technology allowing crews' PDAs to read the chips and for customers to enter their PINs.

Virgin Atlantic Airways is one of the first UK airlines to have implemented the new technology with customised software from its onboard purchaser Tourvest Duty Free. Tourvest airlines operations executive inflight Sarel Marals told DFNI: ?We'll be able to start using it as soon as customers are issued with the right cards. The testing period should tell us which problems we'll encounter when we switch over completely. We'll then have time to sort those out before the deadline.?

British Airways acknowledged that updating systems would be a challenge, but that it was prepared for the change. Technical architect Adrian Jameson said its chip and PIN pad on new units would be attached to a portable component that will allow a customer to insert their credit card and to enter their PIN number before it is re-docked by crew to the base station to complete the transaction.

?The challenge ahead is to ensure that the new devices conform to the various chip and PIN banking regulations and that there are no usability issues with either our crew or our customers,? said Jameson.

But Bristol Office Machines Clue Trader business executive Victor Pinies told DFNI that the new system offered opportunities as well as compliance problems. ?There are several important implications for airlines and inflight retail. Firstly, because credit card companies are taking less of a risk, the commission they charge will be between 0.5% and 1% lower. Secondly, there will be no need for credit limits to be so low, £300 for example, as transactions will be more secure. Airlines can therefore improve on their volume-to-profit ratios by including more expensive items in the range. For example, airlines that were never able to stock Rolex watches because no one carries that much cash will now be able to sell them with credit card transactions.

See DFNI July, out this week, for an indepth report in inflight technology and the chip and PIN issue.