Latest Financial NewsStay tuned for the financial news from all over the World!

Nations that are ahead of the technological curve in terms of credit card security systems are rapidly adopting an innovative type of card-reading device known as “chip and pin” technology. The chip and pin on cards is much harder to hack than the old-fashioned magnetic strip, so criminals trying to steal your credit card information or money will have a much more difficult time.

That means you can make more secure payments during your travels to the countries that have this kind of pin and chip system which is also known as an EMV-compliant card technology. Or it could mean that you will land in some distant foreign country with lots of plastic and very little cash, only to find out that your credit cards do not work because back in the USA credit card companies have not yet gotten on the EMV-compliant bandwagon.

Credit cards issued in the USA have magnetic strips on the back, and those cannot be read by most of the newer credit card machines used in about two dozen other countries. That means that with very rare exceptions if you try to use a card from those other countries it will not work in the USA. And if you are planning to travel this summer for business or that long-awaited European vacation, the chances are also very high that the credit card from your USA-based bank will not work, either. You can wind up stuck a long way from home with no way to make credit card purchases, and that could turn a vacation into a total stressed-out nightmare.

Only in rare situations in the USA is the technology to read these more sophisticated cards just now beginning to appear, at places like Wal-Mart. But a large trade organization known as the Smart Card Alliance reports that in at least 22 other countries outside the USA credit card issuers have already begun the seismic shift over to pin and chip or chip and pin technology. That includes lots of nations in Europe, our neighbors in Mexico and Canada, as well as Brazil, Japan, China, and India. Meanwhile a consulting firm did a survey last year regarding the new EMV-compliant trend. They discovered that the majority of people who carry credit or debit card plastic from the USA have experienced problems using their cards in other countries.

Pin and chip involved an embedded and encrypted microprocessor chip, and the cardholder also enters a private PIN number – which accounts for the term “pin” and “chip.” So if you show up in Europe and go to a train station, toll booth, gas station, or other type of system that is not attended by a real person, you might be out of luck. These machines will most likely not be able to read a card that uses the conventional magnetic strip technology. The same goes for increasing numbers of in-store card swiping machines across Europe and other countries. Visa says that if you have a problem, however, all you need to do is explain it to the clerk. But one of the companies that makes pin and chip systems says that may not always solve your dilemma, because many store clerks don’t understand how to accept cards that use magnetic strips.

The motivation for upgrading to a more secure and advanced system seems quite obvious, especially since theft of credit card information and other types of credit card fraud have reached epidemic proportions. But the financial industry in the USA is reluctant to spend the money that it would take to replace the older technology. They have already spent tons of money on magnetic strip systems, and converting over to the EMV-compliant way of doing things – which is arguably much better and safer for consumers – would cost them about $9 billion.

Wal-Mart, however, is ready to move forward and embrace the progress. The gigantic retail chain is already in the process of changing its payment systems so that it will be possible to make credit card purchases in Wal-Mart stores while using a new pin and chip or “smart” card. Another innovator is the credit union for the United Nations, a financial institution headquartered in Washington, DC. The organization is the first financial institution in the USA to start switching to EMV-compliance, and it plans to begin issuing the upgrading cards to its customers very soon.

Similar Posts:

• High-Tech Credit Card Skimmer Fraud on the Rise
• Beware of Credit Card Theft During the Holidays
• The Art of Credit Card Skimming
• The Years Ahead
• Paint by numbers? Is it better than starting from a blank canvas?