The basics of chip-and-PIN credit cards

We’ve gotten a lot of questions from readers lately about chip-and-PIN credit cards, also known as EMV cards (for Europay, MasterCard and Visa, the originators of the technology). Although they’re almost universal in Europe, credit card companies have yet to widely offer them to American customers. For travelers headed around the globe, here are the basics:

What is a chip-and-PIN card?

A chip-and-PIN card looks pretty much like the plastic you’re used to. But it’s embedded with a special chip that contains the same information that has traditionally been contained in the magnetic strip along the top of a standard card (some cards have both). When you swipe a chip-and-PIN card, you must enter a PIN to complete your purchase, the way you do with a debit card.

Why the move to chip-and-PIN?


(MARCO GORAN ROMANO)

Chip-and-PIN cards are more secure, says Anisha Sekar, vice president of credit and debit products for the consumer site NerdWallet. The chips are harder to clone, reducing the likelihood of fraud. Europe and Canada are much farther along in adopting a chip-and-PIN system.

What’s the impact on travelers?

Americans carrying cards equipped with magnetic strips may encounter problems when making purchases abroad, especially at unattended kiosks, such as at train stations or gas pumps. Merchants on a chip-and-PIN system can still process our dowdy strip cards, but you may need to press them to do so.

Why have American cards been slow to adopt chip-and-PIN technology?

There are costs — new cards, new equipment, etc. — associated with implementing the chip system, for both companies and merchants. Also, priorities have been different over the past few decades, credit card companies say. Europe invested in chip technology early on so that transactions could be approved at the point of purchase instead of over telecommunications networks. Using those networks is cheaper in the United States.

Why does it seem as if American chip-and-PIN cards are targeted to more elite customers?

Credit card companies figure that their top-tier cardholders are the ones mostly likely to be traveling abroad, where chip-and-PIN technology is widespread.

If you’re not sure whether your card has a chip, it never hurts to ask. Sekar says that Citi MasterCard will offer customers a chip card upon request. Some Bank of America cards offer chip-and-signature technology.

Wait, what? Now there’s chip-and-signature?

You bet. It has the same embedded chip, but instead of entering a PIN on a machine to verify your purchase, you sign a receipt, just as you’re accustomed to doing here. Of course, this may not be much better than a traditional magnetic strip card if the terminal you’re at is PIN-only.

How are chip-and-PIN cards different from RFID credit cards?

RFID, or radio-frequency identification, cards are contactless. They have a chip and radio antenna that transmit account information, raising concerns (which people are still arguing about years after the cards were introduced) that criminals may use readers to skim consumer details. Chip-and-PIN cards work only when inserted into a merchant’s reader.

So when will we see more American cards with chips?

American Express, Discover, Visa and MasterCard plan to introduce widespread chip technology in the next two to three years, Sekar says. “All of them will hold merchants liable for fraudulent transactions if the merchant doesn’t accept EMV technology beginning in 2015-2017, depending on the card network and the type of transaction.”

What should we do in the meantime?

Check with your credit card company to see if you can get a chip card. If you travel a lot, you might consider applying for a new one with the technology. The State Department Federal Credit Union, which anyone can join through its partnership with the American Consumer Council, is a good option. (Bonus: The SDFCU cards also have no foreign transaction fees.) In addition to credit cards, SDFCU offers chip-enabled prepaid cards.

And be prepared to gently insist that foreign merchants swipe your magnetic-strip card.

Do your research, because it’s not just chips that you need to worry about. Certain cards aren’t accepted in certain parts of the world, period. Sekar says that Africa, for example, is a dark zone when it comes to Discover cards. One reader reported to us that she hasn’t been able to use her Visa card at some locations in Germany, where she has moved for six months.

When in doubt, carry a little extra cash.

Becky Krystal is a member of The Post's Food and Travel staffs. In her spare time she loves to, of course, travel and cook.
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