Chip & PIN cards and why you should have one

By now, I’m sure you have a credit card with a chip, or EMV chip to be specific, in your possession. It’s that thing on your card that makes the person at the checkout tell you, “You need to use your chip in the bottom thingie,” or makes them say when you try to insert your chip card, “We don’t use that chip thing yet, so you need to swipe your card.”

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That thing on the left side of the card is the “chip”

In the U.S.A., we like the think we lead the world in just about everything, but when it comes to credit card security we are decades behind the curve. EMV ( Europay, Mastercard and Visa) chip technology was introduced back in the 1990s and rolled out throughout Europe in the 2000s. The chip in the card is used to confirm the information instead of reading the information off the magnetic strip on the back. This technology is harder to counterfeit and, supposedly, cuts down on fraud. The banks in Europe rolled out this technology first because credit card fraud was, at the time, much more common there. When the chip cards were introduced and helped prevent fraud, the criminals went to the least protected market, the USA, so they could continue with the scamming. Lucky us.

The reason you have received chip cards in recent years is mainly financial. On October 1, 2015 the financial responsibility for fraudulent charges changed based on chip availability. After that date:

  • If the bank didn’t issue you a chip card and someone made a fake charge to your account that went through, the bank was responsible for the money.
  • If the bank gave you a chip card and the merchant (seller) didn’t have the technology to read a chip card, the merchant was on the hook for the charge.

This technology is still rolling out in the U.S., where it appears the final date for implementation will be at the gas pumps, where the liability shift described above starts on October 1, 2020. I’d imagine that most everyone in the U.S. will have a chip card by then.

So what is a chip + PIN card and why are we just starting to get them in the U.S.?

If you have a debit card with a chip, you are already familiar with the process of a chip + PIN card. You insert your chip and the reader asks for your PIN to complete the transaction. Pretty simple, right? This is the system that most of Europe has run on for their credit cards for over a decade; chip + PIN, rather than chip + signature. It seems the banks in the U.S. thought it would be TOO COMPLICATED for people to remember a PIN for their credit cards so they chose to go with the chip + signature method for cards issued in the U.S.  Here is a quote from a Krebs on Security interview with Julie Conroy, a fraud analyst with The Aite Group, about chip + PIN vs. chip + signature cards:

“…we are the most competitive market in the world, and so as you look at the business case for chip-and-signature versus chip-and-PIN, no issuer wants to have the card in the wallet that is the most difficult card to use.”

Why should you care?

I was reminded of why you should care when I was reading a travel group on Facebook and someone was writing about how they were just in Europe and tried to buy a train ticket with their Chase Sapphire Reserve card and it was denied by the automated ticket kiosk. They only card they could get to work to buy a ticket was their bank ATM card.

I knew what happened immediately. This kiosk would only work with a chip + PIN card and the only card they had that used chip + PIN was the debit card from their bank. I’ve read in many posts that non-U.S. train/subway ticket kiosks and gas stations often will ONLY take chip + PIN cards. It seems strange to me than even when banks promote their “best” travel cards like the American Express Platinum, the Citi Prestige and the Chase Sapphire Reserve, they chose to make these cards work by chip + signature. It comes as no surprise that one of the only banks that issues true chip + PIN cards is Barclays, a UK-based bank.

By reading this article, you probably know more about what a chip + PIN card is than most of your bank’s representatives. So don’t be fooled if your bank says that your card has a PIN, when you know you haven’t been set up for chip + PIN. That PIN might only be able to get you money from an ATM, that your bank will treat as a cash advance, but it will not help you get you gas for your car rental in the middle of France.

What should you do?

When I travel overseas, I always make sure I have at least one card that will work with a chip + PIN reader. For me, that is my Barclays AAdvantage® AviatorTM Red Mastercard®

320x180_aadv-aviator-red-card

This isn’t a card I normally use for everyday spending, but I make sure to carry it with me whenever I travel outside the U.S. because it has true chip + PIN functionality and charges no foreign transaction fees to use it outside the U.S.

Here is a link to an up to date list of banks and the Chip + PIN cards they issue.  Who knew that my Chase Sapphire Reserve won’t work to get me a train ticket but the L.L. Bean Visa or the Frontier Airlines MasterCard will???

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The Frontier Airlines Mastercard from Barclays Bank has Chip + PIN capabilities.

The bottom line is that you need to be prepared when traveling overseas and carrying a credit card that has “true” chip + PIN functionality is one of those preparations. Simply asking your bank may not be enough because many of the bank representatives don’t even know what chip + PIN means. While the big banks like Chase, Citi and American Express have decided not to issue them, many others such as Wells Fargo, USAA and US Bank, along with many credit unions, issue chip + PIN cards. It’s quite possible that you currently have a card with chip + PIN functionality and don’t know it – but it’s better to find out BEFORE you leave the country.

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