Waiting on the Chip

by Mercator Advisory Group 0

As the US becomes increasingly insular as a mag-stripe card environment, more commentators and individual travelers are reporting difficulty using their US-issued cards in chip-and-PIN environments.

Increasingly, American cardholders report problems using their cards overseas, particularly in Europe, where most countries now issue chip and PIN (personal identification number) cards. As a result, fewer terminals are enabled to read magnetic stripe cards. And even if they are, merchants are not as familiar with them. Recent research indicates U.S. travelers, encountering these problems, are using their payment cards much less when they’re abroad.

The issue is becoming exacerbated as banks in more countries, most recently Canada

, are transitioning to chip and PIN-based cards, which are considered more secure than magnetic stripe. This all poses a challenge for U.S.-based issuers who want to accommodate their customers.

While technically inter-operable with terminals wordwide, clerks are increasingly unfamiliar with how to handle magstripe cards. But when there is not even a clerk, results can be worse:

And the increasingly widespread use of unmanned payment terminals – for everything from bus or train tickets to bike rentals and highway tolls – can make it more difficult, since there’s no clerk to whom a cardholder can appeal


So far, only the United Nations Federal Credit Union in the US has announced it will issue dual technology cards, and they have since received inquiries from many internationally-traveling potential customers based on their announcement.

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