Having someone from your bank interrupt you while you make an unusual credit-card purchase can be embarrassing.

But we might all appreciate the value of card issuers doing security checks and enhancing technology to reduce the estimated $200 million a year in credit-card fraud.

It's reassuring to know that security checks can reduce the chances of a larcenous salesperson putting through an unauthorized charge, or stop a terrorist from using a copy of your card to buy ingredients for a bomb.

But, when the security department asks to verify your identity before you can complete a purchase with your own card, it rather spoils some of the excitement of conspicuous consumption.

Someone else in a store might jump to conclusion that it's you who is an imposter, counterfeiter or, worse still, a financial nincompoop.

So it's good news that the chances of interrupted transactions will be reduced by the new generation of credit cards starting to inhabit Canadian wallets.

Each of these cards has an embedded computer chip, and the new generation of card readers already in some stores requires the authorized cardholder to enter a personal identification number, or PIN, as we do with debit cards.

Entering a PIN instead of signing a receipt will generally assure the card issuer that you are who you say you are, without requiring you or the merchant to call while you are standing at a cash register.

Provided everyone remembers his or her number, we could enjoy faster checkout lines. The risk of a stranger using a lost card or stealing personal information would go down year by year.

"We are going to continue to apply some of the different security features, even though we have this amazing new layer of chip cards," says Tanya Freedman, Visa Canada's director of public relations. "We are still going to be vigilant ... but it's likely the average cardholder will see the frequency of (requests for identity verification) diminish."

After years of talk about chip technology, which showed up first in Europe, some new-age cards have started to arrive in Canada. For months, the Royal Bank of Canada's Avion travel-rewards cards have each sported a subdivided yellow spot with six contact points to communicate with a card reader.

Some of the new cards will each have a miniature antenna to allow an even quicker checkout, such as at a gasoline pump or parking lot.

The payment industry, including Visa, MasterCard, American Express and Interac, announced a couple of weeks ago that participants had come together to ensure a smooth migration to chip technology in Canada.

Visa Canada had announced three years earlier that all its members were committed to chip cards, while the Interac Association and MasterCard issuers announced last year.

Chip cards will be rolled out on a large scale starting next year, say executives at Visa Canada, which has 23 member institutions with nearly 27 million cardholders and which processed a record 6,363 transactions per second last Christmas Eve.

Mike Bradley, Visa's vice-president of products and platforms, and Allen Wright, director of chip initiatives, say half of point-of-sale devices that accept Visa cards will be converted by 2008. By 2010, 85 per cent of all Visa transactions will be processed using chip cards.

Bradley says merchants suffered considerable heartburn in the United Kingdom when their rollout of chip technology was pushed through in less than two years from start to finish.

Chip cards have proven to reduce fraud by up to 80 per cent in such countries as Malaysia. After they are introduced, fraud artists tend to migrate to neighbouring countries that have yet to adopt the technology.

Canada is one of the few places in the world where the payments industry is doing a countrywide implementation of chip technology. Others are or have been Brazil, Mexico, Great Britain, France and South Africa.

The slowness of certain countries, including the United States, Mongolia and most parts of Africa, will require international payment cards to continue using raised lettering for carbon imprints and magnetic strips for old-generation card readers for years to come.

Bradley notes, however, that card users do 95 per cent of their transactions in home countries. So, once most Canadians are using chip cards with PINs, security systems will have an easier time picking up fraudulent transactions in another country.

Meanwhile, Visa issuers intend to continue supplying cards that require a signature for the benefit of clients with impaired memory.

That may be a relief to the country's 9 million or so baby boomers as they get older. But, then again, asking to sign a paper receipt could become the new source of embarrassment.

James Daw, CFP, appears Tuesday, Thursday and Saturday. He can be reached at 416-945-8633; 416-865-3630 by fax; or at jdaw@thestar.ca by email.