RBS dishes out chip and PIN readers

The Royal Bank of Scotland (RBS) is dishing out chip and PIN devices to its online banking customers.

The chip and PIN card readers will be sent to customers free of charge and people will start receiving the devices this week.

An RBS spokeswoman told silicon.com customers who make frequent "advanced transactions" - people setting up payments to new third party accounts, setting up new standing order payees or changing online banking PINs or passwords - will be the first to receive the devices.

The spokeswoman said: "The aim of the project is that all our customers who use online banking will eventually have a card reader."

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The chip and PIN terminal works in conjunction with the RBS online banking system. When a customer is - for example - setting up a third party payment, an eight-digit code is displayed on the bank's website.

The customer then puts their card into the chip and PIN device and types in the PIN, followed by the eight-digit on-screen code.

The chip and PIN terminal then uses this information to generate a unique 'response code' which the customer then feeds into the online banking system to authorise the transaction.

Customers who want to use online banking to view account details and pay existing bills will be able to continue to use the online banking system as normal without the need for chip and PIN readers.

Because this is a staged rollout, there are no exact plans as to when and how many chip and PIN terminals will be handed out, said the spokeswoman.

RBS is hot on the heels of Barclays which is in the process of sending out half a million chip and PIN terminals to its online customers.