4/13/2012 7:55 PM ET|
New credit cards make travel harder
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.
"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.
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Funny. As a Canadian, I'm very much used to chip-and-pin (we've had it for about 5-6 years now), but ironically, I ran into an issue in the US on a road trip last summer, where I encountered a number of gas stations that required a zip code to be entered when paying at the pump with my VISA. Not having a zip code made this fairly irritating (it isn't the end of the world to have to go into the station to pay, but you lose the convenience). So these things can catch people out all over the place, and not just overseas.
I am surprised that the US hasn't moved to chip-and-pin, as it is quite a bit more secure than just swiping, and with the growing concerns around debit/credit card fraud, makes sense to use. Plus, it might allow you to drop the zip code thing.
I've lived and traveled overseas over the past 15 years, and each year it gets more difficult to use my US cards. Before moving to Asia this past year for work, I checked with all the major banks, my local Credit Unions, and Credit Card companies. Capital One is the best deal I found for traveling abroad, but they do NOT offer the chip and code technology. I found a West Coast bank that offered the card, but I had to go into one of the branches to open an account first. Being on the East Coast, that was impossible.
In doing research last summer, I found the reason we Americans do not have this system (why it is not wide spread) is because banks would have to upgrade their systems, which would cost several billions of dollars. Until it is forced upon the industry, no one big bank wants to make the capital investment. In the meantime, I can certainly relate to being stuck in the airport with cash, but no coins and no way to get that one little subway ticket into town. It is very frustrating.
My solution was to use a foreign (major international) bank. I had to open an account in order to get a card, but I can use it ANYWHERE in the WORLD where Visa is taken. I know it is not an option for everybody, but carrying a lot of cash scares me. In a large city where a very large percent of the population travels abroad regularly it seems there would be a Credit Union, or bank that would offer such a card. Maybe there is, but I did not find one on the East Coast.
When travelling to the UK last year we had a lot of trouble with our credit cards in the smaller cities and with smaller businesses ( my brother owns several businesses and said he would not take a credit card without the chip and pin...apparently as a business owner he has much more recourse against a card that has chip and pin than one without)....in London, all the major places (Harrods, Museums,restaurants etc) took my US card but a lot of the smaller mom and pop places wouldn't.
Definetly if you plan on travelling in Europe make sure you have cash and if you are going to be staying somewhere away from the main tourist places (my parents live in a pretty small town where you wouldn't normally see tourists) plan on utilizing cash and/or ATM.
As a frequent visitor to England I will be looking into getting a card in the future with the technology in it.
Why don't our cards have the same technology? I was in europe last year and only took one card with me. I used it in Italy and it worked fine. Then we were in Spain and it would not work. My credit card company cut it off. They didn't know who was using my card all over europe. I had to call amex and give them my itinerary and they turned it back on.
I work in the merchant service industry in the US. It's very very common for US merchants to call and ask about foreign cards. They have letters in the zip codes and the US does not, the software in the terminals are formatted for US only, so merchant are forced to bypass the prompt and may usually pay more becuase AVS was bypassed. They take CC security very seriously every other place in the world but here. 2 weeks ago GLOBAL PAYMENTS had a breach and CC numbers were compromised...another US company I'm fairly sure.
I"ve been in the industry since 2003 or so, and changes are coming. They started with the Durbin ammendment and soon I'm sure we'll see more regulation regarding fees and other pricing.
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