As payments technology springs forward, international credit cards demand more than just fewer fees and better travel rewards. Frequent overseas travellers have to put up with a lot from their Yankee credit cards: a 3% transaction fee for all purchases made abroad, for one, and the constant fear of being denied because American credit card security systems are incompatible with everyone else’s. Now, US Bank joins Chase and Wells Fargo in offering travel cards that use the prolific EMV chips that have yet to take hold in American markets.
As the New York Times reports, US Bank will issue its FlexPerks Travel Rewards Visa with the EMV chips that are the basis of the standard verification system in Europe and elsewhere. Short for Europay-MasterCard-Visa, EMV chips are embedded into credit cards and often combined with a signature or PIN for corroboration. Because some European retailers won’t accept the traditional (and outdated) American magnetic stripe, international travellers have sometimes seen their credit cards rejected. US Bank, and others, hope to address this headache.
The slow spread of EMV chips
Even though EMV chips are generally considered safer than the US’s magnetic stripe, they haven’t caught on stateside. Some say that this is because fraud is generally lower here, while others cry foul: they say that safer chips mean lower fraud costs, and lower fraud costs mean less justification for high interchange fees. In any case, it seems possible that the United States will bypass EMV chips entirely and go straight to remote payment systems.
Banks that issue cards for international travellers, though, are starting to come around. Chase’s Palladium Visa, which is issued to frequent travellers, will begin to carry the chips. It recently introduced a new EMV-compatible card, the JPMorgan Select Visa Signature, and hopes to expand its offerings this year. Wells Fargo announced in April that it would test the chips with about 15,000 of its globetrotting customers. Finally, the Raleigh-based State Employees Credit Union rolled Euro-friendly cards in response to complaints from customers.
Most cards, however, cling stubbornly to magnetic stripes. Travelex, a currency converter that sets up shop inside many airport terminals, offers EMV-enabled prepaid debit cards that can be loaded in euros or pounds. While the cards are certainly a temporary solution, most travellers would prefer to avoid the fees of prepaid debit and rack up rewards on their frequent flyer credit cards.
Another ingredient in the payment alphabet soup
While Europe and Asia use the EMV chips, Silicon Valley is working towards contactless payments that use near-field communications, or NFC, chips. This new development will allow you to simply wave your smartphone over a cash register to make a payment, with no fumbling necessary. The FlexPerks Travel Rewards Visa, offered by US Bank, is also NFC-enabled. It can be used with “contactless” payment systems, which are on trial runs in some parts of the county. Google, Samsung and Nokia have hopped on board, and Apple’s got an NFC-enabled phone in the works (not, though, the iPhone 5). Visa, too, is wandering into the mobile payments world. Perhaps, in the not-too-distant future, the rest of the world will find their security methods outdated instead.
Tim Chen is the CEO of NerdWallet, a credit card website that keeps consumers up to date on the latest and best credit card offers.
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