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Monday, October 5, 2009

Why American Credit Cards Suck

If you prefer to use a credit card when traveling abroad due to safety and better exchange rates, bad news. Other countries have adopted smartchip technology in their bank cards, and soon we Americans may be forced to use cash when traveling.

Smartchip technology is sort of a banking equivalent of the metric system—it's superior to magnetic stripe cards, every other country is using it, and the American banking system simply isn't interested.

Twenty-two countries, including much of Europe, Mexico, Brazil and Japan, have adopted the technology, according to the Smart Card Alliance, a nonprofit association that promotes chip cards. About 50 other countries are in various stages of migrating to the technology in the next two years, including China, India and most of Latin America, according to the association.

In the last year, Canada began rolling out chip-and-PIN cards and plans to stop accepting magnetic stripe debit cards at A.T.M.'s after 2012 and at point-of-sale terminals after 2015.

These governments like the cards because they reduce fraud. With an embedded microcontroller, large amounts of data can be stored on the card itself rather than in a central database, and counterfeiting such a card is difficult.

Canada, nooooo!

We understand that American banks have enough problems right now, and tourists' ability to buy train tickets or rent bicycles at a kiosk is not high on their list. So consider this a travelers' advisory instead of a consumer complaint.

For Americans, Plastic Buys Less Abroad [NY Times]

(Photo: Ciaran McGuiggan)