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U.S. travelers abroad are between a chip and a hard place.

Other countries have so thoroughly embraced a more secure credit card technology called "chip and PIN" that tourists have found their American-style plastic doesn't work at some places overseas. The problem is particularly acute at automated kiosks, but travelers also can run into merchants who won't accept their cards.

Retired teacher John Morris of Denver encountered the problem in September after arriving at Charles de Gaulle Airport outside Paris. A train ticket into the city cost less than 10 euros, but the automated kiosk required exact change or a credit card with chip-and-PIN technology -- neither of which Morris had. There was a ticket booth with a human teller where Morris could have used his American Express card, but it was swarmed with other travelers.


"I asked some people near the front of the line how long they'd been waiting, and they said two hours," recalled Morris, 70. "I couldn't find anywhere that would make change. Even Air France, my airline, refused to change a 20-euro note."

Morris -- frustrated, angry and hot, because the station was sweltering -- wound up taking a taxi into Paris, a trip that cost 60 euros, or about $80.

It's not that your credit cards are useless overseas. Most merchants and travel providers in Europe, Asia, Latin America and Canada -- the areas that have adopted the smart-card technology -- still accept U.S. credit cards, says Odysseas Papadimitriou, who travels to Europe a few times a year and is the chief executive of credit card comparison site Card Hub.

Liz Weston

Liz Weston

But U.S. cards, which rely on older magnetic-strip technology, simply won't work in machines that require users to punch in a personal identification number, or PIN, that's matched against a computer chip embedded in the card. U.S. debit cards won't work in these machines either, because they lack the all-important chip.

You could find yourself:

  • Trapped in a parking lot that relies on automated kiosks to exit.
  • Unable to buy gas at a pay-at-the-pump station.
  • Prevented from buying bus, subway or rail tickets.
  • Stopped at toll booths that require chip-and-PIN cards.

Some travelers report they've also encountered problems with clerks who don't know how to process a swipe-card transaction or merchants who refuse to accept U.S. cards, believing they're less secure. Such problems seem to be more common as time passes and fewer people are familiar with the older technology, especially in Europe, said Dan Ray, the editor-in-chief of CreditCards.com.

"The odds are greater now that you'll have some trouble," Ray said. "Europeans are less likely to have the machinery or the people who are eager to process your card."

Your debit card will work in overseas ATMs, but you may want to shorten your PIN if it's longer than four digits. Many foreign ATMs don't accept longer PINs. Also, foreign ATM keypads often don't have letters. If the only way you remember your PIN is by typing in a word into the keypad (say your password is 9-6-7-3, but you remember it by typing in the corresponding letters W-O-R-D), you should memorize the digits before you go.

True chip-and-PIN cards are hard to find in the U.S., credit card experts note. Diners Club is replacing its customers' cards with chip-and-PIN versions, Papadimitriou said, and Wells Fargo is testing a version. (Don't count on getting one, even if you're a Wells Fargo customer. When I called the bank recently to request one, the phone rep had no idea what I was talking about. After talking to a supervisor, he said I wasn't eligible.)

A company called Travelex offers the Cash Passport card, a prepaid debit card with chip-and-PIN technology -- but the card offers a much less favorable exchange rate than what travelers can typically get with their credit cards.

Some other issuers, notably Chase and U.S. Bank, offer cards with so-called chip-and-signature technology. These cards work with the terminals that most merchants use to process chip-and-PIN transactions, but they won't work with automated kiosks, which require PINs.

"With chip-and-signature cards, fraud protection is done primarily online, meaning purchase authorization entails cross-checking fraudulent card numbers via the phone lines," Papadimitriou said. "However, unmanned kiosks at train stations, airports (and elsewhere) rely primarily on offline verification, which necessitates having a PIN that corresponds to an embedded card chip. Therefore, a chip-and-PIN card will be needed unless you can find an attendant to help you with the transaction."

Chip-and-signature cards from Chase include the British Airways Visa, the Hyatt Credit Card, JP Morgan Select Credit Card and the JP Morgan Palladium Card. U.S. Bank offers the chip-and-signature FlexPerks Travel Rewards Visa Signature, which also has "contactless" technology that allows it to be waved in front of special terminals instead of swiped.

"By all accounts, certain banks have opted to go with them instead of chip-and-PIN cards because the barriers to entry aren't as significant," Papadimitriou said, noting that the issuers don't have the expense of establishing a PIN management system. "And they still get a fancy new feature to market."

Michael Dolen, the founder of website CreditCardForum, said issuers shouldn't ignore U.S. consumers' calls for true chip-and-PIN cards. Although they may be a small minority, those who travel abroad tend to spend a lot, making them more valuable customers, he said.

Until chip-and-PIN cards are more widely available in the U.S., credit card experts recommend that travelers take the following precautions:

  • Have at least some local currency with you at all times.
  • Keep your passport with you for at least the first few days to see whether local merchants demand it as an extra precaution. Papadimitriou said he was asked for his passport several times by merchants in London.
  • Consider buying train tickets in advance from the U.S. or making your transportation purchases during weekday business hours, when human beings are more likely to be available to help with your transactions.

Morris, the traveler who took the expensive cab ride, said American Express refunded the cost of the taxi after he complained about his inability to use the card. That was nice, he said, but even better was getting his replacement Diners Club card in January with chip-and-PIN technology.

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"When I travel (abroad) now," he said, "at least I won't run into the same problem."

Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.