The Low-Down on Chip-and-PIN Cards

Chip and Pin Card Machine, Europe
When Europeans buy something with their chip-and-PIN card, they insert the card in a machine like this one, then type in their PIN.
By Rick Steves

Europe — and the rest of the world — is adopting a new system for credit and debit cards. While handy for locals, these chip-and-PIN cards are causing a few headaches for American visitors: Some machines that are designed to accept chip-and-PIN cards simply don’t accept US credit cards. This news is causing some anxiety among American travelers, but really: Don’t worry. While I’ve been inconvenienced a few times with automated machines that wouldn’t accept my card, it’s never caused me any serious trouble. Here’s the scoop:

Today, outside the US, the majority of all cards are chip cards. These “smartcards” come with an embedded security chip (in addition to the magnetic stripe found on American-style cards). To make a purchase with a chip-and-PIN card, the cardholder inserts the card into a slot in the payment machine, then enters a PIN (like using a debit card in the US) while the card stays in the slot. The chip inside the card authorizes the transaction; the cardholder doesn’t sign a receipt.

My readers tell me their American-style cards have been rejected by some automated payment machines in Great Britain, Ireland, Scandinavia, France, Switzerland, Belgium, Austria, Germany, and the Netherlands. This is especially common with machines at train and subway stations, toll roads, parking garages, luggage lockers, bike-rental kiosks, and self-serve gas pumps. For example, after a long flight into Charles de Gaulle Airport, you find you can’t use your credit card at the ticket machine for the train into Paris. Or, while driving in rural Switzerland on a Sunday afternoon, you discover that the automated gas station only accepts chip-and-PIN cards.

In most of these situations, a cashier is nearby who can process your magnetic-stripe card manually by swiping it and having you sign the receipt the old-fashioned way. Many payment machines take cash; remember you can always use an ATM to withdraw cash with your magnetic-stripe debit card. Other machines might take your US credit card if you also know the card’s PIN — every card has one (request the number from your bank before you leave, and allow time to receive it by mail). In a pinch, you could ask a local if you can pay them cash to run the transaction on their card.

Most hotels, restaurants, and shops that serve Americans will gladly accept your US credit card. During the transaction, they may ask you to type in your PIN rather than sign a receipt. Some clerks in destinations off the beaten track may not be familiar with swiping a credit card; either be ready to give them a quick lesson, or better yet, pay with cash.

In a few cases, you might need to get creative; drivers in particular need to be aware of potential problems when filling up at an automated gas station, entering an unattended parking garage, or exiting a toll road...you might just have to move on to the next gas station or use the “cash only” lane at the toll plaza.

Those who are really concerned can apply for a chip card in the US, but I think this is overkill. Major US banks, such as Chase, Citi, Bank of America, US Bank, and Wells Fargo, are beginning to offer credit cards with chips — but most of these come with a hefty annual fee. Technically, these are "chip-and-signature" cards, for which your signature verifies your identity, not the “chip-and-PIN” cards being used in Europe. While the American cards have chips, they are not configured for all offline transactions (in which the card is securely validated for use without a real-time connection to the bank). The cards will work for most European transactions, such as in Paris Métro or the London Tube stations, but they might not work at an out-of-the-way gas station in Provence, where the gas pump is probably offline. If you really want a chip card, ask your financial institution if it plans to offer one soon, and find out if the card is “chip-and-signature” or “chip-and-PIN.” With either type, be sure you memorize the PIN for your card in case a card reader requires it.

Some credit unions are beginning to roll out true chip-and-PIN cards that work for all transactions, online or offline. One attractive no-fee card is the GlobeTrek Visa, offered by Andrews Federal Credit Union in Maryland (open to all US residents).

In the future, chip cards should become standard issue in the US. Visa and MasterCard have asked US banks and merchants to use chip-based cards by late 2015; those who don't make the switch may have to assume the liability for fraud. There’s been lots of resistance, as the conversion may cost up to $8 billion. But businesses and consumers are feeling the pain as international criminals exploit our antiquated magnetic-stripe technology to hack into and compromise millions of US accounts every year. When your bank next renews your credit card, it’s likely there will be a chip in it.