For 42 million adults with a total of more than 130 million credit and debt cards in their wallets and handbags, it is tempting to believe a new era in security begins today when chip and Pin becomes the crucial factor in using those cards.

From now, retailers can refuse to serve card-carrying customers who are unable to recall their pin (personal identification number).

Indeed, if they allow a transaction to go ahead without it which subsequently proves fraudulent, retailers will have to foot the bill.

With one card fraud occurring every eight seconds on UK-issued cards under the old system, banks - who were picking up most of the losses - had to make life tougher for fraudsters.

According to research from Alliance & Leicester, consumers are warming to chip and Pin - 86 per cent of shoppers are comfortable with it.

The Association for Payment Clearing Services (Apacs), the banking industry's voice on fraud, believes card losses could have topped £800m last year if nothing had been done.

In the event, the roll-out of chip and pin began in October 2003 and credit and debit card fraud figures from Apacs in early March are likely to show annual losses cut to £400-450m.

So, a project costing banks and retailers about £1.1bn to introduce is already cutting the fraudsters' haul - with hopes in official circles that chip and pin will send the figure even lower now it is fully up and running.

Some card transactions will remain outside the chip and pin regime. As many as 15 per cent of British retailers have yet to upgrade till payment systems and are most unlikely to have completed the changeover by today.

Mark Bowerman, at Apacs, said: "Currently, more than 80 per cent of retailers have adopted chip and Pin.

"They don't have to have it, and their decision might be based on how much fraud they have suffered.

"It might be that these shops could find themselves increasingly targeted by the fraudsters."

Some consumers will stay outside the new system too, including those yet to receive upgraded cards - about ten per cent of the total number in circulation - and disabled people unable to work the new system.

About 100,000 cards have been issued to remain on the old chip and signature system, although Apacs spokesman Mark Bowerman says some disabled people find the new system easier to operate.

Visitors from countries yet to adopt chip and Pin - including the US - will also continue to sign for purchases.

For most of us, however, the new regime imposes obligations which it might be expensive to ignore. And it might well expose us to new scams, while old familiar ones are shut down.

The Banking Code warns that cardholders acting "fraudulently or negligently" won't be refunded for any losses.

So if consumers write down their number - even disguised as a telephone number in a contacts book - they won't be compensated for losses.

Revealing a pin to a partner, son, daughter or friend is also likely to be ruled negligent.

Keeping the same number for all cards is not recommended - but not likely to be negligent.

There is a danger that fraud will increase in other sectors, such as when the card is not present - usually over the phone or internet.

Customers might be tricked over the phone into revealing their date of birth or the three-digit security code on the signature portion of their card, or give their pin number to a waiter in a restaurant rather than going with them to the till to type it in themselves