The credit card industry in Europe and the U.S. handle their card security differently, and that’s causing problems for U.S. cardholders traveling in Europe.
In the U.S., we use magnetic stripe technology on our credit cards. Merchants obtain card holder signatures on a paper slip or in their credit card machines to validate transactions.
In Europe, their credit cards use EMV chips (integrated circuits) embedded in the credit card which require the cardholder to input their “Pin” (multiple digit number) into the merchant’s credit card machine to validate the use of the card, similarly to how we validate debit card use in the US.
Unfortunately for U.S. travelers, many European credit card kiosks in railway stations, parking garages, gas stations and tollbooths don’t permit the use of magnetic striped credit cards. They require the European style “chip and pin” cards.
I flew from Philadelphia to Amsterdam’s Schiphol Airport a couple trips ago. After quickly going through immigration, and retrieving my bag from the carousel, I went straight to the railway station at the airport. My hotel was less than a 10 minute walk from Amsterdam’s Central Station.
At the station, I went to the kiosk to purchase a railway ticket. My credit card was rejected. In fact, at the railway station, the ticket kiosks reject all magnetic stripe based credit cards.
According to an official Visa statement provided to me,
“If the cardholder encounters an unattended rail ticket machine or kiosk that does not recognize non-chip cards, cardholders should present their card to an attendant or agent (e.g., at ticket windows).”
I did that, but it’s inconvenient, and time consuming. I was in line for 15 minutes before being taken at the Schiphol station, and missed the train I wanted. As far as I’m concerned, that isn’t a solution to the kiosk problem.
Earlier this month, I traveled in the Baltic Region of Europe. In Denmark and Sweden I had to insist restaurants swipe my U.S. credit card to pay for my meals, several times. Readers have told me they’ve had real arguments with restaurant and small hotel managers about accepting their US credit cards. A few times, they gave up and used cash.
Erica Harvill, spokesperson for Mastercard, acknowledged the problem stating,
“While this is non-compliant with MasterCard rules requiring merchants to provide for the acceptance of all cards, including magnetic stripe cards, in EMV chip environments, it still occurs.”
Ms. Harvill indicated that often merchants don’t want to accept the U.S. cards generally because they haven’t been trained properly, not because their credit card machines won’t accept them. I agree. When the restaurants finally swiped my cards, they always worked.
Mr. Hopkins, and Ms. Harvill both indicated their companies are proactively working with merchants regarding the acceptance of U.S. credit cards.
So far, from what I can tell, that work hasn’t been effective. For example, at Schiphol Airport, for at least the last three years, no kiosk has accepted magnetic stripe credit cards. Moreover, anecdotally my experience, and that of friends and readers, indicates the situation is getting worse at kiosks, restaurants, shops and hotels, not better, despite the credit card companies’ current efforts.
I spoke with Marina Norville of American Express. I wanted to know if Amex had any concrete plans to issue “chip and pin” credit cards to its U.S. cardholders. She told me they have no plans to make that switch in the near future, and it’s generally the same at Mastercard and Visa.
All three credit card issuers did indicate their companies are constantly evaluating the situation, and speaking with all their stakeholders about the problem.
Any change from credit card magnetic stripe technology to “chip and pin” technology will require a large investment, not just for the credit card companies, but for the merchants who will need new equipment.
In Visa’s statement to me it states,
“Visa is also working with financial institutions who want to evaluate the feasibility of issuing chip cards for frequent international travelers, and conducting market research to determine whether or not the issuance of chip cards for travelers would materially alleviate any acceptance issues.”
Mastercard indicated they are looking into essentially the same possibility. I have no doubt that American Express would follow suit, considering the large number of both corporate and small business travelers in their cardholder base.
Erica, and Marina, tell your respective companies that your international traveler cardholders would more than welcome the opportunity to get new credit cards from you, which have magnetic strip technology for home use, and “chip and pin” technology for travel use, but I’m not so sure that’s anything more than a stop-gap solution. Any traveler, even going to Europe once in their lifetime, will want that card.
Plus, our northern neighbor Canada is quickly moving toward “chip and pin” technology themselves. Thousands of U.S. truck and bus drivers, casual day shoppers, vacationers, patients of dentists and physicians, and pharmacy clients travel to Canada every day.
I acknowledge it won’t be as easy to move the U.S. credit card industry to “chip and pin” like Europe and Canada, but the truth is, in my opinion, it’s got to be done. We can’t keep isolating our nation from the rest of the world. “Chip and pin” advocates maintain that the changes’ cost will be recouped, at least in part, by a drop in credit card fraud. That will help.
Let’s join the rest of the progressive Western financial world. The switch to “chip and pin” will be good for travelers, and good for the U.S. as a whole.
* This article was edited on 8/30/2010 to correct the attribution of the Visa statement.