Credit card hassles overseas

     Americans could have an increasingly hard time using their Visa and MasterCard debit and credit cards in other countries, unless banks and other card issuers play some fast catch-up in a technology that's becoming the standard almost everywhere except the United States.
     Most countries, including Canada and Mexico, are gradually replacing "swipe and sign" credit and debit cards — the kind that carry a magnetic stripe and require a signature to approve a purchase — with new smart cards called "chip-and-pin" cards.

     These cards are embedded with a microprocessor instead of a magnetic stripe to store cardholder data. Customers enter a PIN — personal identification number — into a device that reads the data on the chip. Restaurant waiters run the charges through tableside so the card never leaves a customer's sight.

       Chip-and-pin is considered more secure, but U.S. banks, citing the high cost of changing over an entire payment system and issuing everyone new cards, are so sticking with the old technology.

    How big is the problem for travelers? 

    Most of the hassles so far involve people reporting they are not able to use cards in some types of train and subway ticket-vending machines, gas pumps and other automated payment terminals (e.g., City of Paris Vélib' bike-rental kiosks) that take only credit cards.   Read more here in my Seattle Times Travel Wise column.  

        A number of readers e-mailed after the column appeared, citing more examples of problems. Read all the comments here.


        Here's one that hits home at the problem the credit card companies and the banks continue to deny exists.

"The situations described in your article are exactly what my family and I experienced on a three week visit to Norway to see family. As late as August 2009 I had no problems using my US issued (VISA) debit cards (issued by Chase and Telcom Credit Union). During our three weeks in Norway in July we encountered that the chance that our debit cards would be accepted was about 50/50. It made it a stressful situation each time we wanted to use the cards because there seemed to be no way to tell whether the location we were in would accept it or not.

The result was that we ended up seeking out ATMs to withdraw cash in order to avoid any embarrassing situations in stores, restaurants or even public transportation. I thought one reason to carry a debit (or credit) card with a VISA or Master Card logo was convenience and ease of use, and the elimination of having to acquire foreign currency before embarking on any travel outside the United States. It is not easy to buy foreign currency in a US bank or credit union. If you are lucky, the institution may be able to order the type of currency you want, but in most cases they can’t help you. Walk into any bank in Europe and you can buy just about any world currency you want.

I find US banks and credit unions operating in the “stone ages” compared to similar institutions in e.g. Norway, stretching from online banking systems to wire transfer, and, as above, to customer friendliness and making life easy on their customers. Don’t get me started on online banking convenience. Why can an online bank customer in Norway pay his/her bill and the money is instantly applied to the recipients account. There is no 2-3-7 days wait time. There is no printing and mailing of checks. It is done 100% electronic and basically in real time.

In your article you state that there is a significant cost involved in installing new terminals to read the chip cards, and that is a major reason there is resistance in the US to implement this system. Well, while I was away in Norway, I received my new replacement Chase debit card (the old was about to expire), and it has a brand new feature called “blink”. “Blink is easy” a note attached to the card told me. “Now paying for purchases is a breeze. Just hold your Chase Check Card to the reader instead of swiping it.” But, doesn’t this new technology require new readers to be installed? A picture of a reader does indicate that there is a special reader for these “Blink” cards. Isn’t this an expensive change?

Why is it that in many instances, not only this, the US is hell bent on doing “its own thing” and not follow standards adhered to by the vast majority of countries? Is the reason for not implementing the chip really the cost of new readers, or is that just an excuse?"

Sincerely,

Tor-Eddie

 Novi, MI 48375

        I liked what this person had to say about the various reasons banks give for not getting on board:  


"To add to your cache of anecdotal evidence, I offer the following:

"It's too expensive" - It cost Bank of America $28,000 when my credit card went to Mexico without me a few years ago. We had physical possession of the cards here in WA, but the thieves still got their money. How much money is the bank losing when this kind of thing happens?

"We want to make sure the technology is not obsolete" - Europe was doing this in 2005 and I don't know when they started. But, that is still 5 years.

"Our cards are good everywhere" - they're not. As you so rightly said, you can't use them in automated machines, especially those in transportation stations. If there is a long line or you need to travel at an off time, Americans are out of luck.

Here's an idea for banks: Why don't they offer a credit card option strictly for travelers? I wouldn't mind paying a fee just to have something that I knew I could access anywhere. And, I'll be looking for the first credit card company that offers it, which would deny my current bank those additional fees they charge for overseas transactions." -- Patty O'Grady