Question: I recently spent three months in France. I went armed with my Visa credit and debit cards from my financial services company. Every time I used the card, I had to sign a sales slip/receipt. This was merely an inconvenience as long as there was a human on both sides of the transaction. But France has automated points of purchase — sometimes at hotels, gas stations and toll booths — that do not have a human present. This was a major problem, especially at gas stations, because France, unlike the U.S., does not have stations on every corner. When I returned home, I contacted each financial organization, from which I got zero help. What’s the solution?
Answer: McIntosh is a member of the 5%. That might seem like code for “just a little less wealthy than the 1%,” but what it really means is that he’s unlucky.
He is, it seems, one of the 5% of U.S. cardholders whose cards do not work abroad.
That figure is an estimate by Joe Cortez, points and miles expert at Nerd Wallet, a financial consumer website, who said that 95% of U.S. chipped cards work in Europe.
To understand why this is an issue, let’s travel back in time.
While the U.S. clung to magnetic stripe cards — swipe and sign — other countries relied on chipped EMV cards—Europay, Mastercard, Visa.
“The reason EMV became a standard was it was more secure,” Cortez said. “It generates a unique code when the card is used, unlike the information on a magnetic stripe card, which doesn’t change and makes it easier to create a counterfeit card.”
Having a magnetic stripe card is basically giving someone a “key to your house,” he said.
The U.S. introduced chipped cards in October 2015.
Here’s the issue, though: Chipped cards come in a couple of familiar flavors: chip and signature or chip and PIN, or personal identification number.
In the first case, you pay and sign. In the latter, you input a PIN, not unlike what you do with a debit card. The PIN card is said to be more secure, because few merchants compare signatures. Even if they do, a well-practiced fake scrawl can be hard to detect.
When the U.S. finally implemented the chipped card, it chose chip and signature. Merchants, it was said, were concerned about the customer experience. The new chipped cards take longer to process, and adding a PIN, another layer of protection, wasn’t in the cards, so to speak.
“Incidents of identify fraud rose 16% in 2016, costing individuals $16 billion in loses, which was an all-time high,” the article said. “The study did not look exclusively at credit cards, but Javelin said the vast majority of identity theft fraud is linked to credit cards.”
It’s not so easy for the bad guys to create a counterfeit card that works in this age of chips, because the code changes with each transaction, but, the story noted, “the criminals are keeping their illegal activity online, where the new chips do not come into play.”
In any case, the U.S. had taken a step forward but wasn’t quite in line with the rest of the world, where chip and PIN is prevalent. But, travelers were assured, their chip and signature cards should work even in unstaffed kiosks.
In visits to Europe and Asia in 2016, I had no problem with a chip and signature card, but I also wasn’t buying gas or train tickets. (I did have a problem with fraud on my American Express card, which the company alerted me to before it put through $5,000 in charges for round-trip tickets from Nairobi, Kenya, to Sacramento.)
Cortez recommends taking at least two kinds of credit cards, because unexpected problems (besides the signature issue) arise. If a credit card company suspects fraud, it will cancel or freeze a card, which is what happened with my Amex card. I would have been cooked had I not had others with me. (Be sure to alert your card companies before you travel. You often can do that online.)
But Matt Schulz, chief industry analyst at CompareCards.com, a credit card marketplace and information site that’s part of Lending Tree, thinks “your best move is to get yourself a chip and PIN-compatible card before you travel” abroad.
“To me, it’s a case of ‘better safe than sorry,’” he said. “My family went to Europe in 2016, and we got ourselves a Barclay Arrival Plus. We found that we used it a couple of different times in unmanned kiosks in parking lots in couple of small towns in France.
“International travel is stressful enough as it is. If getting a chip and PIN can eliminate a couple of headaches and variables from your trip, to me, it’s worth the…annual fee.”
The $89 annual fee is billed, its website said, within six weeks. The card also does not charge foreign transaction fees.
That’s the easiest card to get your hands on. Others, through credit unions, sometimes require you to join an organization before you are eligible. You can find lists at several sites, including Credit Card Insider (lat.ms/InsiderPIN), Wallet Hub (lat.ms/HubPIN) and CreditCards.com (lat.ms/CardsPIN)
Three final notes:
►Some credit card companies do send you a PIN, but that may be for a cash advance with interest rates that may make you wince. But do see if your credit card company can offer you a PIN for international travel, which has nothing to do with a cash advance.
►Be careful using your card at gas stations. They are not required to convert to chip until 2020, Schulz said. He suggests checking your card or bank statement (if you’re using a debit card) carefully. Generally, look for small charges, not round-trip tickets from Nairobi to Sacramento.
►Cash is always king, Cortez said. It may be old fashioned, but until contactless payments become standard, it may be your quickest financial bailout.