If you're traveling overseas this summer, you may want to shop
for more than a swimsuit and walking shoes before you go. As EMV
smart cards continue to proliferate outside the U.S., it's becoming
increasingly difficult to use traditional magnetic stripe credit
cards in certain travel situations. But a handful of new U.S.
credit cards could help American travelers.
Here's a guide to minimize your credit card hassle as you travel
Continents drifting apart
The first thing to realize is that the credit card systems of
America and the rest of the world are drifting apart.
Europeans have had EMV cards for years. The initials stand for
EuroPay, MasterCard and Visa, the three processing firms that
agreed in 2002 to a standard for the embedded microprocessor chip
in each card. The chip encrypts data differently for each
transaction, making it more effective in preventing fraud and
harder to clone than a magnetic stripe card.
Rather than swipe an EMV card through a reader, the user inserts
it into a terminal that reads the chip and then asks for a personal
identification number or prints out a receipt for a signature.
Europe began transitioning to chip-and-PIN cards back in 2004, and
a total of 80 countries are now in some stage of EMV use, with the
U.S. being the most notable holdout (see map).
Clashing with cashiers
While this transition has been going on, American travelers have
often been left to fend for themselves. Magnetic stripe cards are
still widely accepted in most large tourist destinations, but
globetrotters may find themselves in a jam if they're off the
beaten path without cash. "A lot of times, people working on the
tills just aren't familiar anymore with doing anything apart from
having the customer insert the card and the terminal prompting them
for a PIN to be entered, so when they come across a card where
there isn't even a chip, it can throw people a little bit," says
Neil Aitken, spokesman for the UK Payments Council.
Issuers advise cardholders that if they have trouble with a
merchant, they should simply tell the clerk that he is required to
swipe the card and follow the prompts on the machine. But try doing
that in a place where you don't speak the language.
Ken Wakita tried, and found himself out on the street looking
for cash. He was in a less-touristy area of Brussels a couple of
years ago and tried paying for a restaurant meal with his
mag-stripe credit card. The waiter, who barely spoke English,
refused the card. Wakita didn't speak French or Flemish, so
discussing payment system protocols seemed out of the question. He
had to excuse himself and go out to find an ATM so he could pay his
bill with cash. "You're supposed to tell them they have to take
your card," he says. "Yeah, in theory they have to, but in reality
it's totally different."
He was frustrated and embarrassed by the incident. "The U.S.
should be aware. Why is it falling behind?" he says.
Late to update
A key reason the U.S. has been slow to adopt EMV is that,
unlike Europe, its telecommunication systems have been low-cost for
decades -- cheap enough to allow credit card transactions to be
verified and completed nearly instantly, by wire. So there hasn't
been the same drive to make a costly industry switch -- though
that's beginning to change as criminals move their business from
EMV countries to non-EMV countries. "The industry joke is the last
one to migrate to EMV is the one with the best business case
because of all the fraud they're experiencing," says Eric
Schindewolf, vice president of product development for Wells
Another reason is that the U.S. banking system is highly
fragmented, unlike many places where small groups of financial
institutions can issue top-down edicts. "We have 15,000 banks and a
lot of them issue credit cards," explains Julie Conroy McNelley,
research director at Aite Group. "We have four different payment
networks just on the credit card side of things and a whole bunch
of smaller networks on the debit card side of things. So it was
much harder to get the market aligned around a common approach for
No human = no luck
Complaints from U.S. travelers have been getting louder. Unmanned
payment kiosks are a particular pain point. Tom Hiemstra was in a
small town in Holland for a cousin's wedding when he realized he
couldn't pay for parking -- he didn't have an EMV card or the
proper coins for the parking lot kiosk. He drove around looking for
a space, parking in what he thought was unzoned street parking; but
when he came out to check 10 minutes later, he'd already received a
ticket. "I guess it was permit parking because I got nailed for 85
euros," he says.
For Kenneth Aron, a businessman who travels to Europe six or
seven times a year for work, the problem has been persistent. He
has routinely been stuck in long lines at train station ticket
offices because he couldn't use the EMV-only ticket machines. "It's
just this chronic frustration," he says. "Oh no, I'm going to
Europe, I can't use my credit card."
He got so desperate he asked his daughter, who's studying in
Europe for a year, to leave her bank account open when she comes
back home so he could use her credit card when traveling.
Things have changed for Aron, though, and for other travelers like
him. As he was preparing for a European trip a few months ago, he
received a replacement card for a lost Chase British Airways
Visa. To his surprise, the card came with an EMV chip. He used it
on his trip with no problems. "I'm thrilled," he says. "It's been
Chase is one of several institutions that have begun rolling out
EMV cards in the United States on a limited basis (FlyerTalk.com
has an ongoing list of cards on offer). The number of cards should
be growing thanks to incentives from Visa, MasterCard
and Discover for U.S. merchants and acquirers to adopt EMV
technology by 2015.
EMV choices in the U.S.
Here's how the EMV offerings in the U.S. shake out so far:
-- Bank of America, Merrill Lynch and a few other issuers are
offering EMV cards to corporate customers only.
-- Some Citi cardholders report on Internet travel forums
that the bank has been willing to upgrade their MasterCards to
chip-and-signature cards. The requests seemed to work best when
made by tweeting @AskCiti.
-- Wells Fargo was one of the first banks out of the gate with a
pilot program that issued 15,000 EMV cards to select customers last
year. But that pilot is now closed, and the bank will only say that
it will be looking at "moving into production in a very graduated
-- Some credit unions, such as the United Nations Federal Credit
Union, issue cards, but for their members only.
Chip-and-signature for new cardholders
-- US Bank has added a dual interface to its FlexPerks card that
includes contactless payment and chip-and-signature capabilities.
Chase offers a number of chip-and-signature cards for new and
existing cardholders. Wakita, who had the trouble paying his cafe
bill in Brussels, got the Chase Hyatt credit card and had no
trouble using it on a recent trip to Canada and Japan, though he
didn't try to use it at any unmanned kiosks.
-- Travelex's MasterCard Cash Passport is a prepaid foreign
currency card that you buy online and have shipped to you or picked
up at a Travelex office. But there is a pickup fee (up to $10) and
the currency conversion rates are less than favorable. "It's a
pretty egregious rate," says Victoria Hawkins, a flight attendant
who has used the card.
She has other complaints too. She ended up emptying the card in
the U.S. soon after she bought it and found she couldn't refill it
online within 24 hours of purchasing it. The phone number provided
didn't work, and the Travelex office in Paris insisted she buy a
new card for a fee rather than refill her existing card. Bottom
line: proceed with care.
- The only chip-and-PIN credit card available for the general
public in the U.S. right now is the Globe Trek Rewards Visa from
Andrews Federal Credit Union. It charges a 1 percent foreign
transaction fee but has no annual fee. The credit union serves
civilian personnel at Andrews Air Force Base, but is open to pretty
much anyone who wants to join by becoming a member of the American
Consumer Council for free and depositing $5 into a savings
If you don't see your credit card company here, ask them about
it. They may have something in the works. It's also a good idea to
let them know if you're going on an international trip. Any unusual
activity is a red flag for fraud, so the card may be declined even
if the magnetic stripe isn't a problem. Finally, try to carry some
cash if possible. It's always good to have a backup form of
EMV showdown: PIN vs. signature
As U.S. issuers roll out EMV credit cards for travelers, they are
making decisions about whether to equip them with personal
identification number technology or signature capability. PIN
technology is what's used in most of Europe and it is considered
safer. "PIN transactions have a lower instance of fraud," says Troy
Bernard, director of chip technology at Discover.
Chase has chosen signature over PIN technology, and a company
official would not explain why. Although chip-and-signature cards
should work in most chip-and-PIN situations, there are some places
where an offline PIN is required -- that is, the terminal collects
the PINs for authorization at the end of the day. Signature cards
won't work in those circumstances.
It may have something to do with their plans for a domestic EMV
roll-out. A blog post from Stephanie Erickson, Visa's head of
authentication product integration, earlier this year agreed with
an analyst's opinion that there was no business case for the U.S.
to support offline PIN transactions. "In fact, as a late adopter of
EMV, there's a great upside for the industry in the U.S. because we
can avoid much of the cost and complexity involved in deploying
older-generation chip cards, while still reaping all of the
benefits of reduced counterfeit fraud," she wrote.
Aite Group's McNelly thinks that cost isn't necessarily the
reason. She says that banks didn't want to overwhelm American
cardholders with too much change. "I think that convenience for the
U.S. consumer, who's not used to having to input a PIN for a credit
card transaction, was a lot of the driving line of thinking for
those financial institutions that are choosing a chip-and-signature
strategy," she says. "But against the international travel use
case, I don't think that's the wisest option."
Wells Fargo's Schindewolf agrees that chip-and-signature doesn't
make sense for travelers. The bank issued chip-and-PIN cards to
15,000 customers for a pilot scheme in 2011. "There seemed to be a
little incongruity by only supporting chip-and-signature for
travelers when in essence what they needed was chip-and-PIN," says
PIN card hunting
The shifting card landscape leaves American travelers uncertain and
scrounging for chip-and-PIN cards before they go overseas.
Wakita. the frequent traveler, got a Chase Hyatt EMV card that
he has successfully used overseas, but he also got the Andrews
FCU card as a backup. The Chase card gets first preference
because it charges no foreign transaction fees, while the Andrews
card charges 1 percent.
Actually, calling the Andrews FCU Visa a chip-and-PIN card may
be a bit of a misnomer. Justin Redman, a university employee in
Arkansas, used the card on a recent trip to Europe and was
disappointed to find that in most cases, he was handed a receipt to
sign. Only the Madrid Metro ticket machines asked him for a PIN.
The card defaults to signature unless there is no other option. "It
seems more efficient to use a PIN than to have to sign," he