When I was in high school in Central California, I was on the debate team and we traveled out of town frequently. The most common destination was Bakersfield. Our team always stayed in a motel off the freeway called the “California Inn.” There weren’t individual soaps in the bathroom. Instead, there was a wall-mounted dispenser with liquid soap that was called “EuroBath.” And sixteen year-old me thought that was special stuff! It’s from Europe!
There’s this strange US fetish about Europe, not in all circles of course but in many. Anything that happens there is better, more cultured, more advanced.
That’s not just about bath products, it applies even to credit cards. Europe has moved to “chip and pin” technology where (1) the cards have a chip in them that contains their identifying data and is used instead of swiping, which is ostensibly more secure, and (2) customers enter a personalized PIN rather than just signing for a transaction — anyone can sign a name but the card’s user must enter a PIN code that also makes the card more secure.
And a certain subset of US travelers are jealous. There’s a mythology that it isn’t just cooler and more advanced, but that a card without this technology is useless if you want to travel inside Europe. Anyone not offering this technology is hopelessly behind the times.
Now, there are certain uses for having a card that matches this technology. I happen to have one myself. But it’s not nearly as necessary as is often portrayed. And it the trend towards chip and PIN isn’t even that desirable from a consumer perspective.
In the U.S. card companies have been issuing chip and signature cards — cards that don’t have to be swiped but where you still sign the charge slip. Chase especially has been adopting this technology, such as with the British Airways Visa and Hyatt Visa.
Most businesses that take credit cards accept US cards without a chip. If they have a credit card terminal, they can swipe a card using that terminal. That’s by design, if a business takes Visa for instance they must take all Visa cards. Employees may not be used to it. They may turn up their nose at it. But you can generally use a card without a chip, let alone chip and PIN.
The chip is harder to skim card information off of. And it’s harder to duplicate. Which means that in-person theft of and use of credit card information is harder, though it’s not clear that that’s how most fraud takes place anyway and though there are now machines that capture PIN codes as well.
What you can’t do without chip and PIN is use some automated kiosks. Most places with kiosks have non-kiosk options, you might have to interact with a person and perhaps wait in line. But it’s very rare that you can’t do what you wish without a chip and pin card.
Here’s why chip and PIN isn’t a trend that’s going to be great for consumers. In the US if there are fraudulent charges on your credit card you rarely have any liability for those charges. A simple phone call (technically a written submission is better to protect your rights but rarely necessary) removes charges from your bill, you have no obligation to pay the charges while the fraud investigation takes place.
In Europe, consumer protections on credit cards aren’t as strong. And with chip and PIN cards they can be almost non-existent. Because if there’s fraudulent charges on the card, there’s a presumption that the consumer must not have protected their PIN. And if they’ve not been careful with their PIN, they’re at fault and liable for the charges.
If chip and PIN becomes commonplace in the U.S., one would clearly expect the banks to lobby for similar changes.
Even though I don’t like the trend towards chip and PIN, I happen to have a PIN-enabled card. The US franchise for Diners Club was sold to Bank of Montreal and they’ve re-issued Diners Club cards and chip and PIN. I keep the card even though it’s been significantly downgraded over the years (fewer points transfer partners, no more 60 days to pay, there’s not even a restaurant benefit to the Diners Club card anymore!). I use it primarily for rental cars, since it offers a primary collision damage waiver benefit (something the United Explorer card offers also). You can’t currently apply for a new Diners Club card, though.
There’ll certainly be more chip and PIN cards coming, because there is some demand for it. And there is some usefulness. I expect it’ll take a long time before US consumer behavior can be changed, credit cards have had much broader adoption in the US and for many more decades than in Europe. So I don’t expect chip and PIN to become the standard here in the near-term. But other chip and PIN cards that I’m aware of are:
- State Employees Credit Union
- Andrews Federal Credit Union
- State Department Federal Credit Union
- Cash Passport Prepaid Mastercard
None of these cards are attractive for any reason other than being chip and PIN, however.