Credit card fraud in pubs and bars reached a record high in 2002 with £8.4m worth of fraudulent transactions being made.
According to the Association for Payment Clearing Services (APACS), the problem is getting worse every year and was up nearly half a million pounds from 2001.
These shocking figures coincide with the introduction of chip and PIN, a new way of paying with plastic that should help combat fraud in pubs.
A trial in Northampton will begin in May and, if successful, will culminate in a national rollout by 2005.
Chip and PIN means that consumers will key in a four-digit PIN number rather than signing a receipt, making it much harder to counterfeit cards.
Chris Pearson, chief executive of APACS, said: "Enough is enough - we've seen plastic card fraud rise for several years and that's why the UK's banks, building societies, retailers and card issuers have come together to introduce the chip and PIN solution.
"More than £1m worth of card fraud is committed every day - that's a fraudulent transaction every eight seconds. Chip and PIN will wipe the smile off the faces of the UK's fraudsters."
A spokesperson for APACS added: "The problem is worse in London than anywhere else. We have information on our website that should allow staff to spot stolen or lost credit and debit cards and we issue financial rewards if they do so."
The web address is www.cardwatch.org.uk.
It is hoped that the new technology will halve credit and debit card fraud in the UK.
Meanwhile, banks are also hoping to introduce cards that contain chips to try and combat "skimming" - the most common method of counterfeit fraud.
This is where the magnetic strip is copied by fraudsters using a handheld card reader and then "cloned".