Shopkeepers who have failed to modernise their payment technology by opening hour tomorrow will be exposed to expensive compensation claims.

Changes relating to chip and PIN mean retailers who have not upgraded and continue to accept signature payment will now shoulder the cost of any fraud, rather than banks.

It is estimated a quarter of businesses, mainly independent traders, have still not installed the technology, despite having a year to make the necessary changes.

The Forum of Private Business (FPB) said the way the new system was being "forced through" by the banks was unfair, motivated by greed, and would result in chaos.

FPB chief executive Nick Goulding said: "The FPB has been deeply concerned for some time that chip and PIN is being crow-barred in by the banks, which are desperate to transfer liability for fraud."

Mr Goulding said he was worried that with the liability being transferred, small businesses still offering customers signature payment could be targeted by fraudsters.

He said: "With the January sales kicking off, the banks could not have picked a worse time to force this scheme through.

"FPB members have been contacting us complaining that they are still waiting for their chip and pin machines and it is estimated a quarter of business have not installed the technology."

Charmagne Steedman, manager of the Hemp Shop in Gardner Street, Brighton, said they had received chip and PIN equipment for free because they rent their credit card equipment.

However it was still not up and running despite assurances from the supplier it would be ready in time for the sales.

She said: "First of all we got the wrong machine, then we got the right one but it wouldn't link up with the card machine. They said they would sort it out for the sales but we are still waiting."

A spokeswoman for the Association for Payment Clearing Services (Apacs), stressed the change in liability affected only those retailers who hadn't upgraded.

Signature payment in shops which had upgraded would still be protected, and more than 600,000 of the UK's 860,000 tills had been fitted with the new technology, she said.

The Brighton and Hove City Business Forum has been urging independent traders in the city to upgrade their payment technology for the last 12 months.

Soozie Campbell, city manager for the forum, said: "Traders have had lots of notice about this and it really is in their interest to make the switch, otherwise they could pay the price."