What You Need to Know About Chip-and-PIN Credit Cards

Credit card reader for Chip-and-PIN transactions

Ugurhan Betin / E+ / Getty Images

Chip-and-PIN credit cards do not appear to be much different from a standard card. You also might not see the computer chip, which sometimes is inside the card. It stores a personal identification number (PIN). Instead of swiping the card and signing for a purchase, the cardholder punches in the PIN.

The chip-and-PIN cards (sometimes called "Smart Cards") are designed to prevent credit card fraud. Magnetic strip cards can be "cloned" using a technique called skimming. Visitors dealt with this common travel scam. But residents of these countries were also targeted. This had become such a widespread problem in Europe that the chip-and-PIN technology gladly was accepted.

Chip-and-PIN Credit Card Countries

Although the technology first took hold in the United Kingdom, it has since been accepted in other parts of Europe, as well as Asia, South America, and North America. Canada has been moving toward a chip-and-PIN system for several years, as are banks in Mexico. About 50 countries are working with the technology.

Results vary, but fraud has been prevented because of the new technology. Cloning cards with chips is impossible, as is forging a PIN.

U.S. Switchover Progressing

The U.S. has not experienced the level of skimming and credit card fraud found in other countries. The New York Times quotes a Javelin Strategy and Research estimate of $5.5 billion to convert all cards in the U.S. It is estimated much of that money would go for new payment terminals.

Bank of America cards and Citi Hilton HHonors Reserve cards are being issued with chip-and-PIN technology. Social media movements are underway to gather public support for changes that will tighten security and help Americans avoid problems when traveling overseas. For those who have the new cards, they find many places don't have chip readers. For that reason, American cards frequently have the magnetic strip as well as the chip.

Impact on Budget Travel

American travelers abroad who stay in five-star hotels and deal with human cashiers at point of sale usually find the chip-and-PIN impact minimal. Problems occur at automated points of sale -- places budget travelers are more likely to frequent.

For example, mass transportation is usually the most efficient way to travel between airports and the center of a city. If you'll be buying train or local mass transit tickets from an automated machine, it is possible your card will be rejected. Even some human clerks will simply refuse the card, thinking it will not work.

But that is not always true.

Urge a clerk to swipe the card anyway. Some travelers simply explain the card is "swipe and sign" rather than chip-and-PIN. Popular tourist areas that see American visitors will be less of a problem than more remote locations—again, the kinds of places independent travelers often visit.

Ways to Cope With the Chip-And-Pin Problem

Carry Additional Cash

This is far from an ideal solution. For security reasons, it isn't a good idea to travel with large sums of money. Travelers should already be using a money belt to keep cash out of the reach of pickpocket thieves. That strategy is all the more crucial to your personal security if you carry additional cash.

Avoid Automated Points of Sale

Easier said than done because most budget travelers depend upon ATMs and automated vendors that take credit cards. Try to make purchases for train passes and other such transactions online or at least in advance if possible.

Request a PIN Number for Your Credit Card

This does NOT create a true chip-and-PIN card, but it could speed the process of getting your card approved at a point of sale in a country where a PIN is commonly used. Once you have the PIN, simply request that the card is processed manually. Some will protest, but technically, it is something they can and should do for you--especially if they want to be paid.

Find out If Chip-And-Pin Has Become at Your Destination

The United Kingdom has done the most with chip-and-PIN technology. It is in widespread use. Canada is making the transition, but chip-and-PIN cards are far less pervasive there than in the U.K. Other countries such as Italy, China and India are also moving in the chip-and-PIN direction. Consult updated information for your destination.

Was this page helpful?