CONSUMER TRAVEL: No end is in sight in U.S. vs. Europe credit-card battle

— The big U.S. banks that issue MasterCard and Visa credit cards have apparently decided to ignore a problem that bothers many U.S. travelers to Europe: inability to use their U.S.-issued cards because they do not conform to the validation system most European banks and merchants use.

I’ve been following this problem for about a year, and my latest update revealed not only little progress but also little concern. Marie Antoinette’s spirit lives!

The root of the problem is that U.S. and European banks now use different systems to validate card payments:

U.S. banks still use the original stripe-and-sign system. That familiar magnetic stripe on the back of your card contains basic information about you and your account, and your signature on the credit slip validates your use of the card. Fraud,if any, is detected either when your bank detects a forged signature during processing or when you see a mysterious change on a slip in your monthly statement.

Most European banks, on the other hand, have switched to a chip-and-pin system. Cards contain an embedded microchip with the information previously contained in the magnetic strip, and you use a personal identification number rather than a signature to validate your use of the card. European banks claim their system provides improved security against fraudulent use.

International MasterCard and Visa rules require participating merchants anywhere in the world to accept all properly issued cards, regardless of the security system they use. That’s all well and good, as far as it goes, but pronouncing a rule doesn’t always solve a problem.

The discrepancy in systems often results in nothing worse than a minor hassle. When you’re trying to use a stripe-and-sign card in Europe, some merchants may tell you that your card “doesn’t work.” When that happens, say the Master-Card and Visa folks, you’re supposed to remind the merchant about the international rules and point out that, if the merchant is unfamiliar with the old process, the merchant’s terminal display provides all the needed information: Just swipe the card, go to the instructions, and the system will solve the problem. Although that process could become something of a nuisance, at least your card should finally work.

The real problems occurwith the automated machines that you encounter more and more frequently at highway tollbooths, railroad and metro ticket dispersers, all-night gasoline stations and such. If the machine says “non,” “nein,” or some other version of “fuggedaboudit,” you can’t really argue with the machine about international MasterCard and Visa policy. Here, the party line advice is less than satisfactory. “Ask the attendant to process the transaction.” And what happens if the nearest “attendant” is five miles away, asleep in bed? MasterCard and Visa shrug their shoulders and say “kismet.”

As far as I can tell, neither MasterCard nor Visa would have any problem if a U.S. bank decided to issue cards that use the chip-and-pin and stripe-and-sign systems. But they know of no U.S. banks doing so or planning to do so.However, as one spokesman put it, “we are in discussions with some banks to offer [an expected monetary value] chip for cardholders who travel frequently to chip-enabled markets.” I can name at least two big banks - each obviously courting international travelers - that should be interested: Capital One, with its no-surcharge policy for foreign-currency charges; and Bank of America, with its participation in the no-fees “Global ATM Network.” But so far I’ve seen nothing from either.

At this point, I have no easy work-around for the problem. As far as I can tell, some, if not all, machines that refuse chipless credit cards also refuse chipless debit cards. My best advice - andit’s totally weak - is that you should try to avoid payment situations where you can’t at least argue with a real person about using your U.S. credit card. Let’s hope that changes before too long.

Send e-mail to Ed Perkins at

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Travel, Pages 47 on 12/27/2009

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