Important information on point of sale (POS) equipment upgrades - you should act now if you own your POS equipment.

In 2005 two important changes to plastic card payments will come into force, Switch to Maestro and chip and PIN.

Switch to Maestro
Switch to Maestro is an industry change with the replacement of the Switch brand with Maestro, the debit card brand owned by MasterCard. Maestro is an international debit brand, accepted in over 5.8m retail outlets and over 9m cash machines in more than 93 countries. UK issued Maestro cards are accepted and processed in the same way as Switch. Differences to the acceptance of UK and non-UK issued Maestro are detailed in our Card Processing operating instructions and terms of service.

You need to take action now
You should act now to update your POS equipment to accept non-UK issued Maestro cards and to accommodate the change from Switch to Maestro in the UK. If you haven't already done so, you need to get in touch with your POS software and hardware suppliers to arrange an upgrade. Once your system has been upgraded, you will also be able to accept Maestro cards issued by overseas banks. All software upgrades will need to be certified to ensure that they are compatible with our systems.

If you rent POS terminals from HSBC, we will arrange their upgrade. However, if you own your POS terminals you are responsible for upgrading them.

Ways you will benefit from Maestro:

• Maestro is an internationally recognised and accepted brand
• Access to 511m Maestro cardholders worldwide
• No change in the way that Switch customers use their new Maestro cards
• Simplicity of having one International brand of debit card
• Your business will be able to receive payment from overseas Maestro cardholders visiting the UK
• Increased competitive position
• Increased debit card usage resulting in a safer, more cost effective way of managing cash flow.

Chip and PIN
A new card payment system called chip and PIN is being implemented across the UK in a bid to reduce card crime. Chip and PIN combines new technology in a chip card with the security of a 4-digit Personal Identification Number (PIN) that is entered into the keypad of new-style POS terminals when using debit or credit cards.

Liability shift
On 1st January 2005 there will be a change in the rules that determine the liability for fraudulent transactions where the cardholder is present. If a chip and PIN enabled card is used fraudulently at a terminal that is not chip and PIN enabled, your risk of liability will be significantly higher.

You need to start planning your upgrade now. From 1 January 2005, liability for cardholder present fraudulent transactions undertaken with a chip and PIN card could be borne by you if you have not implemented chip and PIN technology. So it's important that you start to plan the upgrade of your software and hardware as soon as possible.

If you rent POS terminals from HSBC, we will arrange their upgrade. However, if you own your POS equipment you are responsible for upgrading it.

Chip and PIN - a quick reference guide to the technical upgrade:

• Get additional hardware and chip reader
• Ensure that all hardware products (card reading equipment) are level 1 certified
• Ensure that all software products are level 2 certified (copy of certification required)
• Assess PIN security
• Assess PIN Pad placement for customer comfort and bear in mind the needs of disabled shoppers.

Consider upgrading Switch/Maestro and chip and PIN together...
There could be considerable benefits to your business, both in cost and time, if you combine these changes. All software upgrades will need to be certified and once you've completed both the Switch/Maestro and chip and PIN upgrades, you'll need to make arrangements with us to certify that your new software is compatible with our systems.

You can either:

• Contact your supplier/vendor or polling service to arrange an upgrade
• Rent a terminal from HSBC. Phone 0116 281 8541 for a quote.

What to do now

• Find out more about the new systems and their technical requirements - see the 'Useful contacts' section.
• Decide if you want to upgrade both developments together or separately.
• Contact your software and hardware supplier(s) to arrange the timely delivery of your upgrade(s).
• Develop an implementation plan - remember to build in plenty of time for the development, testing, certification and rollout. The more outlets you have, the more time you should allow for this.

Useful contacts

General enquiries on both Switch/Maestro and chip and PIN - call us on 08457 023 344. Lines are open every day, except Christmas Day, 8am to 11pm Mondays to Saturdays, 10am to 5pm Sundays and 10am to 4pm on English public holidays.

Technical queries if you need a copy of the full technical specification to accept non-UK issued Maestro cards and/or for upgrading your equipment to accept cardholders' PINs in conjunction with chip and PIN cards, please call us on 0114 252 9696. Lines are open 8am to 5pm Mondays to Fridays, except English public holidays.

Software and hardware suppliers that HSBC Bank work with, along with other useful information, can be found at www.hsbc.co.uk/chipandpin.

Staff training guides on how to process chip and PIN payments are available on video or CD-ROM - call us on 0116 281 8541. Lines are open 9.00 am to 5.00 pm Monday to Friday, except English public holidays.

Switch to Maestro more information about the changes can be found at www.switch.co.uk.

Chip and PIN payment system has its own official website, packed full of useful information - simply visit www.chipandpin.co.uk. Further information on chip and PIN specifications and testing requirements, together with details of approved testing facilities can be found at www.emvco.com.