However, all is well the credit cards and banks assure us. In theory our Visa, MasterCard and American Express credit cards will continue to be welcomed world wide by merchants who are supposed to let customers pay with either type of card. Unfortunately many reports by world travelers indicate some retailers outside the United States are befuddled with our "antiquated" magnetic strip system and merchants refuse the USA-magnetic strip cards. Worse are the automated ticket kiosks at train stations, gas pumps, parking garages and other places where there are no cashiers and the card holder is wondering why he bothered to leave home with it in the first place.
The banks and merchants assure that chip-and-PIN will make it more difficult for the bad-guys to benefit from credit card fraud. The magnetic strip system used in the United States only requires a signature to authenticate a purchase. Criminals are able to start making purchases immediately once they have their hands on victims' magnetic strip credit cards, potentially charging up before the card is canceled. Clever thieves can also use information gained by Internet hacking or skimming -- secretly swiping a victim's card on a card reader -- to "clone" copies of victims' cards. Chip and PIN aims to make it more difficult for wannabe criminals to make fraudulent purchases by either of these methods. In an article by Bankrate.com, Andi Coleman, a member of the Accredited Standards Committee X9, which determines standards for the financial industry in the U.S states, "It's very difficult if not impossible to clone the (chip and PIN) card. If you steal the card out of someone's wallet, you have to know the PIN in order to be able to use the card in a transaction."
However, ZDNet reports that researchers are finding the chip-and PIN technology broken:
"Chip-and-PIN readers can be tricked into accepting transactions without a valid personal identification number, opening the door to fraud, researchers have found. Researchers at Cambridge University have found a fundamental flaw in the EMV — Europay, MasterCard, Visa — protocol that underlies chip-and-PIN validation for debit and credit cards. As a consequence, a device can be created to modify and intercept communications between a card and a point-of-sale terminal, and fool the terminal into accepting that a PIN verification has succeeded."
Using our magnetic strip cards have not been an issue for us. In Santiago, Chile and while in Spain during our vacation, paying with our magnetic strip cards within the chip-and-pin technology was only a matter of swiping our card and then offering the card to the clerk to verify the last four digits of the credit card number (perhaps as a default pin?). What has been a tremendous cause of extreme frustration, annoyance, embarrassment and anger is the bank consistently requiring us or the merchant to phone and verify that a purchase we just made was actually made by us. Or the card issuer simply blocks our card.
The New York Times article, Advice on Using Credit Cards While Traveling Abroad provides practical tips on credit cards. Not much was offered by way of surviving the issues of magnetic strip cards in the chip and PIN world. Rule of thumb bring cash and lots of it. Until the USA catches up with the rest of the globe we are pretty much out of luck. We can report problems after the fact but that really doesn't help when you are stuck in a toll both with cars staking up behind you or at a hotel that refuses to use the card you offered as assurances of payment.
Other basic tips remain helpful while on the road near or far from your bank:
- Avoid your bank freezing your account by notifying them of your travel plans, whether it's across the globe or in a neighboring ZIP code area.
- Check your credit limit before a trip, since banks have reduced credit limits for some cardholders; travel expenses can push up against those maximums.
- And for when all else fails, carry plenty of cash is a good backup, especially in rural areas and developing countries.
- Call your bank and have it WRITTEN in your records that you will be on an extended trip. Then ask how long that advisory in your account will be valid (for Bank of America it is 6 months) and be sure to mark it on your calendar to call the bank again-before they freeze your card. Of course that assumes the bank security agent will actually go into the records and read that announcement. We had assumed incorrectly with our bank.
- If you are out of the country for an extended period of time change your address and phone number to your foreign address (the alerts systems are less likely to be triggered over and over)
- Open up a bank account in the country you are staying. In Chile that takes some doing.
- Don't forget to budget for those annoying foreign transaction fees in your expenses (as much as 3%). Capital One credit card does not have foreign fees. In Chile we have found that Santender Bank is the only local bank that does not charge fees when drawing money from their ATMs.
- Write the phone number of the bank to call to verify purchases on the back of your card.
- It has been wonderful having our voice over internet phone system to make all those phone calls to the bank. Emails, unless made through the bank's secured internet system do not work.
There is a burgeoning movement to spur more rapid action on the part of USA banks and credit card companies. The United Nations Federal Credit Union is the first and Wal-Mart reported that the company will move to this technology as well. “Get Fluent-C,” is a leader in this effort to bring industry leaders and consumers together to ensure that the technology that debit and credit card uses are “fluent” – understood and processed in every country around the world, across boundaries and cultures.
To learn more about traveling and using credit cards, chip and PIN issues:
- For Americans, Plastic Buys Less Read
- Americans abroad run into trouble using credit cards Read
- United Nations Federal Credit Union Selects Gemalto for First U.S. Issued Globally Compliant Payment Card Read
- Wal-Mart implementing chip and PIN in the U.S. Read
- Wal-Mart to support smartcard payments Read
- Now that U.S. travelers are reporting magnetic stripe card refusals abroad, is it time for EMV in the U.S.? Read
- Universally-Accepted Credit Card ss
- Credit card travel tips