is a payments strategy consultant with Glenbrook Partners, advising ecommerce merchants and financial services companies.
New kiosks in London and Paris for bicycles and parking do not accept our American cards. Rural stores with few tourists are unaccustomed to the old swipe technology. As this happens, Americans are adjusting by keeping their cards in their wallets and returning to cash.
In the past, we’ve been led to believe that all you need is a credit card to travel abroad. So when packing recently for a trip to visit my family in Wales, United Kingdom, I felt prepared with both my credit card and my debit card in my wallet. But things have changed – and not for the better.
When I was a child, I remember preparing for a trip by accompanying my parents to our local bank branch to purchase traveler’s checks. It wasn’t exactly convenient – but it felt safer than traveling with a lot of cash. Over the last twenty years, technological progress made traveler’s checks obsolete – until Europe adopted the EMV chip credit card.
Banks in 22 countries including the United Kingdom, France, Mexico, and Canada have implemented EMV chip programs for local cards. Many programs use what is called “chip and PIN.” The intention is to reduce fraud with increased security of something you have – the chip – and something only you know – the PIN. American cards do not have the chip. Our magnetic stripe or “swipe” cards are now unusable at a variety of places overseas.
|"Grocery store after drug store after gas station refused the card because it lacked the chip."
I was struck on this trip by the number of locations in the United Kingdom that either had no ability, or were unwilling, to accept my U.S.-issued cards. Grocery store after drug store after gas station refused the card because it lacked the chip. Cashiers in rural Wales explained they could not take a “swipe card” for payment.
It wasn’t just Wales where this was a problem. Trying to park on the street in Mayfair in London – right outside the American Embassy – we found a parking meter that proudly displayed Visa and MasterCard logos. Not only was I unable to pay for parking with my American cards, but we were also slapped with a £40 parking ticket by the City of Westminster.
The media has shared a number of stories of people with troubles in Paris and London. Obviously, I was not alone in being unprepared for EMV chip cards. We have not had to travel with cash in our wallets in years. The U.S. market hasn’t been keeping pace with the latest card payment technology being deployed in the rest of the world. What is happening to the ubiquity of worldwide card acceptance? To the concept of one card I can use everywhere? To slogans like “All you need”?
The expression for chip cards is that you need to “dip the chip” or enter the card sideways so the terminal can read the chip instead of swiping the long side of the card. This is not a problem with the terminals being used. MasterCard and Visa have clear policies that if the merchant displays the brand, they must accept all cards, regardless of the technology. Most store cash registers and merchant terminals can read both chip and swipe cards. The physical barrier is mostly at unattended terminals for train tickets, parking, tolls, bike rentals or pay at the pump gasoline.
|"It’s a strange feeling to arrive in a foreign country and not be able to use your cards everywhere"
So why the concern? Despite the fact that machines can take a swipe, many of the clerks do not know how to use it that way. Smaller stores are also concerned they may get charged with fraud from a stolen swipe card. Visa and MasterCard suggest that as a consumer you can insist a merchant accept the card if they display the network brand. How good does your French have to be to insist that the clerk at the one drug store in a small town in France figure out how to swipe your card?
Some say that American card Issuers will begin to offer their customers a chip card as part of a premium “travelers’ card” or business travel product. Nilson Reports suggests this may occur as early as the end of 2010.
In the mean time, American travelers may need to take the time to get local currency before traveling. It’s a strange feeling to arrive in a foreign country and not be able to use your cards everywhere – the way you have done for the past ten to fifteen years. So I ask myself, “Are we really heading back to traveler’s checks and cash?”
Jacqueline Chilton, payments strategy consultant with Glenbrook Partners.