The year ahead already presents a host of challenges but there’s more on the horizon for 2005 in the form of an unprecedented number of changes to business processes and legislation. The countdown has begun, says Siân Harrington, and you must be prepared
On January 1, 2005 retailers will become liable for all losses incurred as a result of fraud on debit and credit card transactions.
The shift in liability from bank to retailer is a result of the major banks coming together to fight fraud, which costs them £400m a year and is increasing at 30% a year.
The only way to combat this is for retailers to implement new Chip and PIN technology, which is being forced on them by the banks. The public will be allocated new cards, containing a secure chip, and new Personal Identification Numbers. They will be required to key in the PIN at the till instead of signing a receipt. During the changeover, signature authorisation will also be allowed but once the transition to PIN is complete this will no longer be possible.
The resulting investment for retailers includes new software, card readers, upgraded tills, back office systems and staff training. If retailers do not have this card reading equipment installed by 2005 they will be liable for the losses incurred due to counterfeiting and theft.
The major retailers have started putting the new technology in place and small retailers with bank-leased systems will not have to worry as the banks are taking care of the upgrades. However, many middle-tier retailers are still lagging behind.
Food and drink is a hotspot for card crime, representing £25m of fraudulent transactions in 2002 compared to £15m on petrol and £13m on clothes, says the Association of Payment Clearing Services.
During a public trial in Northampton last year, more than 200,000 PIN-enabled credit and debit cards were issued and 1,000 outlets accepted the new payment method.
More details at: www.chipandpin.co.uk
If you are one of Wal-Mart’s top 100 suppliers, then you will need to have implemented radio frequency ID tags on pallets and crates by January 2005. Suppliers face costs of tens of thousands of dollars each to achieve compliance.
The retailer is demanding a 100% successful read on tags, so suppliers should be testing their solutions over the course of this year. By 2006 all Wal-Mart suppliers must tag cases and pallets or they will no longer be a supplier to the company.
Bigger suppliers are promised they will soon reap rewards through efficiency. However, in the UK Asda has said it will not force suppliers to introduce RFID in the foreseeable future, despite its parent’s actions.
On January 1 2005, food traceability legislation is being strengthened when the EU General Food Law comes into force.
This outlines the principles and requirements of EU food legislation, establishes the European Food Safety Authority and outlines food safety procedures.
Regardless of traceability systems in place, there will be new legal requirements on all businesses in the food chain to keep detailed records.
Food and feed operators must have a system that allows the identification of “any person from whom they have been supplied with a food, a feed, a food-producing animal, or any substance intended to be, or expected to be, incorporated into a food or feed”.
When the Working Time Directive is enforced in March 2005, it is expected to result in rising costs for both retailers and suppliers.
The directive imposes a 48-hour average working week with a 10-hour cap on night shifts. Among the most significant costs will be those associated with distribution. Retailers and suppliers are expected to have to pay more both in terms of recruitment of drivers and the pay for existing drivers as they are forced to work fewer hours.
The directive forces producers to take responsibility for the collection and disposal of worn out electrical goods.
There is widespread confusion over whether this will be the responsibility of retailer, local authority or third party logistics firm. There is also lack of clarity over who will foot the estimated £455m annual bill for collection/recycling or disposal and when the costs will be incurred (when the goods are sold or when they are returned).
The directive is clear that it is the producers who will have to pay to recoup and recycle their wares. But if Tesco or Asda imports TVs to sell under own brands, will they then be seen as the producer?
The obligation at the moment is for retailers to take back worn out goods - whether they foot the bill themselves or push it back to the suppliers.
The final round of consultation is completed this month. By August 2004 there will be a written text of the legislation.
Date: January 2005 FRAUD LIABILITY - CHIP & PIN
Date: January 2005 WAL-MART and RFID
Date: January 2005 FOOD TRACEABILITY law
Date: March 2005 WORKING TIME DIRECTIVE
Date: August 2005 WASTE ELECTRICAL and ELECTRONIC EQUIPMENT (WEEE) DIRECTIVE
On January 1, 2005 retailers will become liable for all losses incurred as a result of fraud on debit and credit card transactions.
The shift in liability from bank to retailer is a result of the major banks coming together to fight fraud, which costs them £400m a year and is increasing at 30% a year.
The only way to combat this is for retailers to implement new Chip and PIN technology, which is being forced on them by the banks. The public will be allocated new cards, containing a secure chip, and new Personal Identification Numbers. They will be required to key in the PIN at the till instead of signing a receipt. During the changeover, signature authorisation will also be allowed but once the transition to PIN is complete this will no longer be possible.
The resulting investment for retailers includes new software, card readers, upgraded tills, back office systems and staff training. If retailers do not have this card reading equipment installed by 2005 they will be liable for the losses incurred due to counterfeiting and theft.
The major retailers have started putting the new technology in place and small retailers with bank-leased systems will not have to worry as the banks are taking care of the upgrades. However, many middle-tier retailers are still lagging behind.
Food and drink is a hotspot for card crime, representing £25m of fraudulent transactions in 2002 compared to £15m on petrol and £13m on clothes, says the Association of Payment Clearing Services.
During a public trial in Northampton last year, more than 200,000 PIN-enabled credit and debit cards were issued and 1,000 outlets accepted the new payment method.
More details at: www.chipandpin.co.uk
If you are one of Wal-Mart’s top 100 suppliers, then you will need to have implemented radio frequency ID tags on pallets and crates by January 2005. Suppliers face costs of tens of thousands of dollars each to achieve compliance.
The retailer is demanding a 100% successful read on tags, so suppliers should be testing their solutions over the course of this year. By 2006 all Wal-Mart suppliers must tag cases and pallets or they will no longer be a supplier to the company.
Bigger suppliers are promised they will soon reap rewards through efficiency. However, in the UK Asda has said it will not force suppliers to introduce RFID in the foreseeable future, despite its parent’s actions.
On January 1 2005, food traceability legislation is being strengthened when the EU General Food Law comes into force.
This outlines the principles and requirements of EU food legislation, establishes the European Food Safety Authority and outlines food safety procedures.
Regardless of traceability systems in place, there will be new legal requirements on all businesses in the food chain to keep detailed records.
Food and feed operators must have a system that allows the identification of “any person from whom they have been supplied with a food, a feed, a food-producing animal, or any substance intended to be, or expected to be, incorporated into a food or feed”.
When the Working Time Directive is enforced in March 2005, it is expected to result in rising costs for both retailers and suppliers.
The directive imposes a 48-hour average working week with a 10-hour cap on night shifts. Among the most significant costs will be those associated with distribution. Retailers and suppliers are expected to have to pay more both in terms of recruitment of drivers and the pay for existing drivers as they are forced to work fewer hours.
The directive forces producers to take responsibility for the collection and disposal of worn out electrical goods.
There is widespread confusion over whether this will be the responsibility of retailer, local authority or third party logistics firm. There is also lack of clarity over who will foot the estimated £455m annual bill for collection/recycling or disposal and when the costs will be incurred (when the goods are sold or when they are returned).
The directive is clear that it is the producers who will have to pay to recoup and recycle their wares. But if Tesco or Asda imports TVs to sell under own brands, will they then be seen as the producer?
The obligation at the moment is for retailers to take back worn out goods - whether they foot the bill themselves or push it back to the suppliers.
The final round of consultation is completed this month. By August 2004 there will be a written text of the legislation.
Date: January 2005 FRAUD LIABILITY - CHIP & PIN
Date: January 2005 WAL-MART and RFID
Date: January 2005 FOOD TRACEABILITY law
Date: March 2005 WORKING TIME DIRECTIVE
Date: August 2005 WASTE ELECTRICAL and ELECTRONIC EQUIPMENT (WEEE) DIRECTIVE
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