THE new chip and PIN credit card system could leave local businesses and retailers vulnerable to fraud bills because millions of customers still do not have their new cards.

From January 1 businesses take on liability for the cost of any credit card fraud if they accept a signature instead of a personal identity number but many shops and their customers have no choice.

The new system invites customers to use their credit card along with a secret identity number in a bid to crack down on fraud.

But most shops and businesses are still accepting signatures because otherwise they would lose business if a customer is unable to use the chip and PIN system. But this leaves them liable for any losses of the card is used fraudulently.

Geoff Lijka, owner of the Angel Hotel in Chippenham, admitted this left them in a difficult dilemma.

"We are still accepting signatures. It doesn't seem fair but we just have to grin and bear it," he said.

"Some 25 per cent of people do not have the cards yet, and as long as a card is valid, we will go through the normal security procedures and accept a signature."

The Forum of Private Business, a leading business group, blamed the banks for rushing in the scheme and predicted it would cause a major headache.

"The looming crisis threatening to swamp the introduction of chip and PIN technology is entirely the fault of the banks which have aggressively driven the scheme through before retailers and consumers are ready," a FPB spokesman said.

The FPB warned the banks in October that they needed to delay the January 1, 2005 deadline to avert chaos.

The launch of the system, heralded by some as the biggest change for businesses and shoppers since decimalisation, has been hampered by the fact that more than 50 million cards are still to be issued.

The FPB's chief executive Nick Goulding said the banks were guilty of greed, complacency and incompetence and that the January sales period is the worst time the new system could have been introduced.

"The FPB has been deeply concerned for some time that chip and PIN is being crowbarred in by the banks, which are desperate to transfer liability for fraud," he said.

"Retailers are going to be faced with having no option but to accept signature payment, and risk being stung with the fraud, or lose the sale altogether."

His views were backed up by Sally Burfoot-Clarke, manager of T4

Cameras, in Upper Market Place in Chippenham.

She said many customers still have not received their cards and

consequently the shop is still accepting signatures despite the possible liability they faced.

"I've taken four credit card payments this morning and two of them didn't have chip and pin," she said.

"We have to take them but it is worrying because we do not want to have to pay for fraud.

"The banks have pushed this through but they haven't done their part.

"One customer told me she had phoned her bank to ask for a card, but they won't be giving her a chip and PIN till her old card runs out and that will be in May."