US credit card usage woes in Europe

[Richard.McCaw]

Usage of physical USA issued credit cards might be more a problem next year in Europe. I don’t know details for France but best to know what is available/ restricted before going. This is second time the article had been in our local newspaper.

 

Richard McCaw
richar...@sbcglobal.net
Cell: 408-838-9863
Home: 408-448-2899

LinkedIn Profile: http://www.linkedin.com/in/mccaw

 

No end in sight to credit card woes in Europe

More and more Americans encounter trouble — often major trouble — trying to use their credit cards in Europe, and the troubles are spreading to other countries.

Unfortunately, for now, this is a serious problem without a serious solution. A fix, if any, is probably months if not years away, and meanwhile the situation for U.S. travelers keeps getting worse.

The problem is straightforward: incompatible security and verification formats for credit cards:

n U.S. banks use the old “magnetic stripe” technology for security and charge authorizations: When you buy something in a restaurant, store or hotel, a terminal reads information from a magnetic strip on the back of your card and you sign a chit for verification. Automated systems read the stripe and issue printed receipts.

n Banks almost everywhere else are switching to the newer “chip-and-pin” system: When you buy something, a terminal or an automatic machine reads information from a memory chip embedded in your card, and you enter a PIN for verification. Just about everyone concedes that the chip-and pin system is more secure.

And just about everyone anywhere else but the United States is switching. Europe already has switched extensively; Canada, Mexico, Australia, most of South America and most of Southeast Asia are either switching or planning to switch. Soon, the United States could be left alone with an obsolete standard, just as it is with its measurement system.

The problem is also starting to crop up with ATM debit cards. So far, it isn’t as bad as with credit cards, but just wait awhile. ...

Even where chip-and-pin cards are the norm, hotels, restaurants and stores can still accept stripe cards — maybe after a bit of nudging — but many automated ticket, toll and gasoline vending machines no longer accept our cards. Some of those are in locations with no attendant to hand-run a charge, and travelers have found long lines at places that do have attendants. The website GetFluent-C (http://getfluentc.com/sign-up.aspx ) posts many travelers’ horror stories.

So far, U.S. cards generally work in the transitioning areas, but that will change, too, and quickly.

What about a solution?

All I can say for sure is, “Not now; maybe later.”

n So far, the only practical advice from the experts is to take a lot of coins anywhere you expect to need automated machines — many accept coins but not bills. The other conventional advice is a complete cop-out: “Plan ahead.” Feh!

n Apparently, the only U.S.-based bank now issuing chip-and-pin cards is the credit union for the United Nations. No other U.S. banks have yet announced any plans to issue chip-and-pin cards.

n One bank in Milan issues a special card for American visitors, which you can get there, but I have no information on its financial particulars.

However, pressure from tourists, Wal-Mart and other worldwide merchants is growing on U.S. banks to do something. GetFluent-C is trying to marshal public support for a switch; I urge you to support its effort.

The problem is not technology: Apparently banks easily could issue dual system cards that work in both stripe and chip-and-pin modes. Some banks already issue dual mode cards with RFID chips for “contactless” transactions — a different system entirely — and there’s no technical reason why U.S. banks couldn’t issue dual-mode chip-and-pin or even three-mode cards.

You’d think big U.S.

banks would want to get out in front of this issue: Evidence shows that they’re losing money by ignoring chip-and-pin. With its policy of no surcharge on foreign transactions, Capital One clearly targets international travelers, and it is an obviously early adopter candidate. So is Bank of America, with its participation in the Worldwide ATM Alliance.

And American Express certainly should be onboard, with its long-standing commitment to international travel. Unfortunately, I haven’t yet heard a peep out of them.

This is an extremely rare occasion when I highlight a problem without being able to recommend a practical workaround or solution. All I can say is that as soon as I get any positive news, I’ll report it.

Contact Ed Perkins at eper...@mind.net.

CONSUMER TRAVEL

ED PERKINS

 

 

[Leslie Tierstein]

Yes, this was a definite problem for me when I was in Europe -- not in France, but in Scandinavia and the UK.  And that was last year, so it will only get worse. Backing up what the article states, many restaurants etc had equipment for supporting both US and European technologies, but the smaller places, more off the beaten track, could not process my credit card.

I think that Travelex, the money exchangers who have kiosks in many airports, can sell you a debit card that will work with European pin-and-chip technology.  I'm going to investigate that the next time I have to travel to Europe (which will be within a few months).  I can keep you posted.

Leslie

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[Emily O'Brien]

I spent the last two years studying in Germany, and my experience with credit cards was that for the most part, people use them a lot less.  I didn't so much encounter businesses that couldn't handle American credit cards as businesses that don't accept any credit cards at all.  A lot more businesses are cash only, and people are generally more inclined to carry around large amounts of cash and make large purchases in cash.  You're more likely to find places like large chain grocery stores, gadget stores (Best Buy equivalent), etc, that don't accept credit cards at all; they accept only cash or "electronic cash", which is their equivalent of debit, but not always interchangeable.  But in general, you can expect to carry and use a lot more cash than you would in the US.  Around these parts, you get used to whipping out your credit/debit card every time you buy a cup of coffee, and you might never carry around more than $20-30 in cash and not need to replenish it that often.  

Incidentally, they don't really use checks there, either; when we'd use checks, they use bank transfers, which are simple, quick, and free when going between European banks (not so when dealing with international/american banks, then it's much more complicated!).

But the good news is that your ATM or credit card will work just fine and ATMs aren't hard to find.  And if you stick in an American card, they'll give you the option of conducting your transaction in English.  And while in the US you might look sketchy for paying a hotel bill or something in cash (what are you, a drug dealer who doesn't want to leave a paper trail?), it's generally much more normal over there to conduct larger transactions in plain ol' paper money.

Basically, even if you have an account at a European bank and the accompanying high-tech pieces of plastic, you'll still need more actual cash than you would at home.

Emily

[Guy3023]

I am in the UK every couple of months on business and can usually get
by with my magentic stripe card. Last week I was in Lyon, France
where they have a modern city bike system available. There were
stations absolutely everywhere, each with a good supply of bikes in
perfect condition and lots of people were using them. Unfortunately,
it only works with the new technology chip cards :-(( It was the only
payment option available. I would suspect that this might be true of
London's new system too.

Guy

On Aug 1, 1:27 pm, Emily O'Brien <emilyonwhe...@emilysdomain.org>
wrote:

> > richard.mc...@sbcglobal.net
> > Cell:408-838-9863begin_of_the_skype_highlighting              408-838-9863      end_of_the_skype_highlighting
> > Home:408-448-2899begin_of_the_skype_highlighting              408-448-2899      end_of_the_skype_highlighting

> > Contact Ed Perkins at eperk...@mind.net.

>
> > CONSUMER TRAVEL
>
> > ED PERKINS
>
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[Roger Peskett]

Emily, I have heard that to be the situation in Germany - that is,
less use of credit cards. But, France, and the UK, for example, are
different: in those two countries, credit and debit cards are very
widely used - as much as, or possibly more than, in the USA. (Now all
chip-and-pin in the UK; I know less about France.) Of course, that
does not mean that a visitor cannot simply pay in cash for most
things, if necessary. Roger.

On Aug 1, 10:27 am, Emily O'Brien <emilyonwhe...@emilysdomain.org>
wrote:

> I spent the last two years studying in Germany, and my experience with  

> credit cards was that for the most part, people use them a lot less.  .......

[Brian Ogilvie]

In France, chip-and-PIN debit cards have been the norm at least since
my grad school days in the mid 1990s. This is not new technology; it's
just technology that US banks for some reason have failed to adopt,
despite the obvious security benefits. Germany was a little later to
adopt it; if I recall correctly, my Deutsche Bahn VISA card from 1995
did have a chip but there weren't many places, even in Berlin, that
used PINs for verification.

My anecdotal impression, based on trips to France every year or two
and several extended stays there, is that French businesses, even in
the sticks, have gotten better at accepting magnetic stripe cards, no
doubt because handheld terminals that use both systems have gotten
cheaper and more common. But the original article does point out a
real problem with unattended kiosks, which are only becoming more
common.

Interestingly, many of those kiosks are set up to read magnetic
stripes--for instance, the Vélib' cycle kiosks in Paris. But most
American card processors have refused to allow their cards to be used
in the Vélib' system, probably because it places a €150 hold on the
card as a deposit, and that's a lot of money to charge without any
verification. However, American Express cards with magnetic stripes do
work with Vélib', one of the increasingly few reasons that I keep my
Amex account.

Brian

P.S. The cynical side of me thinks that US banks have not adopted
chip-and-PIN verification because customers can't choose the PIN or
change it; it's hard-wired into the card. I bet the banks think that
there are two possibilities: (1) they'll be deluged by calls from
irate customers who have forgotten their PIN and can't use their card,
or (2) customers will write down the PIN and keep it with the card in
their wallet, thus negating the security advantage.

On Sun, Aug 1, 2010 at 8:30 PM, Roger Peskett <rogerp...@gmail.com> wrote:
> But, France, and the UK, for example, are
> different: in those two countries, credit and debit cards are very
> widely used - as much as, or possibly more than, in the USA. (Now all
> chip-and-pin in the UK; I know less about France.)

--
Brian W. Ogilvie <bwog...@gmail.com>
Hadley, Massachusetts, USA
http://homepage.mac.com/brianogilvie/

[Dark Horse]

Without comment.

Google: chip-and-pin security.
Top 7 results.

http://en.wikipedia.org/wiki/EMV#Vulnerabilities

http://www.theregister.co.uk/2010/02/12/chip_pin_security_unpicked/

http://www.zdnet.co.uk/blogs/security-bullet-in-10000166/chip-and-pin-fraud-gang-jailed-10017221/

http://www.dailymail.co.uk/news/article-1250291/Chip-PIN-flaw-means-stolen-cards-used-security-code.html

http://threatpost.com/en_us/blogs/chip-and-pin-security-completely-broken-new-attack-021210

http://www.schneier.com/blog/archives/2010/02/man-in-the-midd_1.html

http://blogs.techrepublic.com.com/security/?p=3153

[Joe Gross]

On Sun, Aug 1, 2010 at 2:10 PM, Brian Ogilvie <bwog...@gmail.com> wrote:

P.S. The cynical side of me thinks that US banks have not adopted
chip-and-PIN verification because customers can't choose the PIN or
change it; it's hard-wired into the card. I bet the banks think that
there are two possibilities: (1) they'll be deluged by calls from
irate customers who have forgotten their PIN and can't use their card,
or (2) customers will write down the PIN and keep it with the card in
their wallet, thus negating the security advantage.

Majorly OT but I can't help it, sorry. Credit cards/banks and the games they play is one of my many deep interest areas.

They don't care about either of these. The only thing they care about is keeping the barrier for you to use your credit card as low as possible.

If I have two credit cards and one goes to a chip/pin and the other is a mag stripe I'm *always* going to use the mag stripe. The first company that forces chip'd cards on their customers will be committing corporate suicide. No one wants to be first.

What about online transactions? Will I need a dongle to connect to my computer? I've already got enough crap hanging off my computer.

What about better security because of the chip (smart card) and PIN? That's not my job. I'm only liable for, at most, $50 of fraudulent transactions that use my card. I'm going to do whatever is easiest and let those with a stake in the game make the game safer.

The card companies would rather eat the 3% fraud rate than make it harder for you to buy coffee with your card.

Now back to riding!

Joe

[Jim House]

Well if you look at the reason for the US banks not picking up the chip and Pin – FOLLOW THE MONEY

A mag strip card cost about $2 and chip and Pin cost about $20 – how many US card holders would need a new card

How about the hardware cost

 

Last the biggest reason for no US banks to join the chip and Pin world is the stop of fraud loss treatment

In the US Bank credit card loss is written off the banks tax at 50% - so you guessed it US Tax payers are giving every credit card thief 50% of our money in lost tax revenue

This is NOT IN PLACE IN ANY OTHER COUNTRY

 

In most non US countries bank regulations allow the bank to charge the customer THE FULL ALL cost of a loss since the thief had to be provided THE ONE AND ONLY working pin number for the pin and Chip card.  The logic is that the only place a thief can receive the working pin is from the customer themselves – so the customer is responsible for the loss and the bank saves millions.

 

In the US there is a law from the 1980 that banks cannot pass this loss onto the customer EVEN WITH the new chip and Pin card.

So there IS NO REASON FOR A US BANK UNDER US LAWS TO EVER GO TO the chip and Pin system

 

In Germany one bank using the chip and Pin has reduced credit card thief by over 65% - but the bank reduced it out of pocked loss by closer to 95% by passing all losses onto the customer who gave out there pin. So if you do the math in the US – loss down let’s say 50% and write off 50% (net 25%) it is not enough savings to make the move for US BANKS – they would still have a loss and higher operating costs and hardware costs.

 

Jim House

Maumee, OH

Former Large Bank Tax Officer

--

[Veronica Tunucci]

Preventing fraud is a bank’s responsibility.  Next time the US tax payers bail out the banks, perhaps we should first check out their fraud prevention procedures and how much they pass onto tax payers in credit card losses.

 

Outdated laws before there was available technology to prevent fraud is a poor excuse for banks to not implement better fraud prevention procedures.   In the last 2 years, I had my credit card number reassigned twice due to large scale fraud issues.  There’s a high operational cost to that too, in addition to a customer confidence loss.  And if I can’t use my credit card on my limited travel abroad, a customer service issue too.

 

Veronica Tunucci

Former and Current U.S Tax Payer

[Jerry Zornes]

That sounds good. But you would be staggered if all losses were automatically your fault and your protections were limited.

Sent via BlackBerry by AT&T

---

From: "Veronica Tunucci" <vero...@comcast.net>

Sender: ran...@googlegroups.com

Date: Mon, 2 Aug 2010 11:15:26 -0700

To: 'Jim House'<jho...@ccsol.com>

Cc: 'randon'<ran...@googlegroups.com>

[Veronica Tunucci]

I don’t see where one has to do with the other.

 

Limiting fraud is still beneficial, even if the loss limits passed on to consumers remains the same. 

[JAMES CHOU]

Just curious if they take any card with chip in it (e.g. Blue from American Express)? I am thinking applying a new card with chip embedded, not sure if this helps my PBP adventure next year.

[NormC]

Just as a point of anecdata, I was in London, UK and the south of
France for most of June this year and had no problem with normal use
of my US-issued, mag-stripe-only debit and credit cards in regular
shops, restaurants and ATMs. Use of a debit card, rather than a credit
card, is preferable for avoiding expensive overseas transaction
charges that many (most?) US-issued credit cards attract.

[Bob Kassel]

Just a couple of comments, having had a chip card (no choice) from a
Canadian bank for 2 years, and now our debit cards are chipped also:
The cost of the hardware upgrades are easily paid for by the decrease
in fraud.
At no time was there any information from the bank that we are now
responsible for any fraud.
The card still has the magnetic stripe so can be used in locations
with no chip reader.
The card can still be compromised because you can still use it for
online stuff, and mail order.
The bank still monitors your purchases - recently we returned from
France/Spain and Visa had called to confrim purchases, to ensure no
fraud.
I chose my PIN, not the bank.

[Donald Perley]

On Thu, Aug 5, 2010 at 6:50 AM, Bob Kassel
<bicyclebob...@yahoo.ca> wrote:

> The bank still monitors your purchases - recently we returned from
> France/Spain and Visa had called to confrim purchases, to ensure no
> fraud.

On that front, my bank suggests letting them know if you will be
travelling so a string of charges in, say France, don't set off the
alarms.

[Pam Wright]

yeah, mine too and I learned the hard way to start asking the credit card company how to contact them from that particular int'l location.   Notified AmEx I was traveling to Grand Cayman this summer.  A charge at the grocery store was denied and several $5 phone calls later (not to mention VERY frustratingly slow email responses) that Grand Cayman doesn't permit collect calls.  The contact with AmEx was worthless.    Just like randonneuring...always have a backup! Pam Wright --- On Thu, 8/5/10, Donald Perley <donp...@gmail.com> wrote:

From: Donald Perley <donp...@gmail.com> Subject: Re: [Randon] Re: US credit card usage woes in Europe

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[Amy M. Harman]

It's a pain when you go to buy rail tix, pay for gas etc at unmanned stations. Luckily one of the other folks along had been living in Germany and had a chipped card. One of my co-workers just returned from Yalta and had even more of a nightmare her bank a credit union she had been with for over 30 years basically had shut off that part of the world and they couldn't get cash etc. They had to borrow cash from someone else on the the trip. Also before you travel don't forget to call your credit card company and tell them so they don't shut down your card thinking its fraud - I had one card shut down on a trip - luckily travel with 2 so was able to get cash and buy an Alpe D'Huez jersey.
Amy

-----Original Message-----
>From: Bob Kassel <bicyclebob...@yahoo.ca>
>Sent: Aug 5, 2010 3:50 AM
>To: randon <ran...@googlegroups.com>
>Subject: [Randon] Re: US credit card usage woes in Europe
>
>
>Just a couple of comments, having had a chip card (no choice) from a
>Canadian bank for 2 years, and now our debit cards are chipped also:
>The cost of the hardware upgrades are easily paid for by the decrease
>in fraud.
>At no time was there any information from the bank that we are now
>responsible for any fraud.
>The card still has the magnetic stripe so can be used in locations
>with no chip reader.
>The card can still be compromised because you can still use it for
>online stuff, and mail order.

>The bank still monitors your purchases - recently we returned from
>France/Spain and Visa had called to confrim purchases, to ensure no
>fraud.

>I chose my PIN, not the bank.
>

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"Let me tell you what I think of bicycling. I think it has done more to emancipate women than anything else in the world. It gives women a feeling of freedom and self-reliance. I stand and rejoice every time I see a woman ride by on a wheel...the picture of free, untrammeled womanhood."--Susan B. Anthony

[Andreas]

Hi Ed,

at least in Germany and France credit cards work with Chip and
signature. The PIN is only used when using ATMs (which is very
expensive with credit cards).

Andreas (from Germany)