Americans increasingly run into trouble using credit cards abroad.
Americans are increasingly facing difficulty using their credit cards abroad.Chief culprit? Different technology standards. U.S.-issued cards still have magnetic strips. More cards abroad are issued with encrypted microprocessor chips, and shops and businesses have adjusted the payment process to the varying standard, says Jack Jania of Gemalto, which develops chip cards.
The chip cards — called chip-and-PIN cards because users must enter their personal identification number — are “being deployed everywhere else,” he says.
According to trade group Smart Card Alliance, 22 countries are migrating to the chip-and-PIN standard, including many in Western Europe, China, India, Japan, Mexico, Canada and Brazil. They’re embracing the new technology because it’s more secure than using magnetic strips, Jania says.
In a 2009 survey, consulting firm Aite Group concluded that the majority of U.S. credit and debit card holders had experienced some difficulty using their cards abroad.
Tom Griffin, a book editor at Rick Steves’ Europe Through the Back Door, a website and publisher of travel books, says the issue is frequently discussed in his company’s online forum. “It’s getting worse.”
Griffin experienced the difficulty when he visited his daughter, Emily, who lives in France. When he stopped at an automated gas station on a Sunday — many gas stations are closed on Sunday in France — he found the pump wouldn’t accept his credit card. “Fortunately, my daughter’s credit card worked,” he says. “And I gave her the cash.”
The problem is particularly acute at automated kiosks in Europe, such as the vending machines at regional rail stations and bicycle rental racks in Paris, parking meters in parts of London, toll roads and gas stations, all of which accept only chip-and-PIN cards. And the problem could get worse. More unattended pay stations are appearing in Europe.
Visa says most payment terminals in countries that have adopted chip-payment technology can still process U.S. cards. Visa advises American travelers to present their cards to attendants “in the rare instance that a card holder encounters a problem” at self-service machines.
Jania agrees but says European sales clerks are more accustomed to chip-and-PIN cards and often don’t know how to process other types. “You have to argue with them to use the card,” he says.
It’s difficult for U.S. financial institutions to switch to the chip-and-PIN standard because they’ve invested heavily in the old technology. It’d cost the industry about $8.6 billion to convert, says consulting firm Javelin Strategy & Research.
Wal-Mart, however, is acknowledging more foreign visitors to the U.S. and the chip’s international appeal. The retail giant is changing its payment system to begin accepting chip-and-PIN cards.
What should Americans do abroad? “Watch out and use cash,” Griffin says.
Via USA Today