American credit cards are lacking the technology necessary for them to be universally accepted in many foreign countries. The important missing element in American cards is smart card technology.
Smart cards still have the old magnetic strip, making them compatible with older terminals, but they also have an embedded microprocessor. The new Smart card technology has been successfully introduced in over 22 countries around the world including most of Europe, Braziland Mexico. Over the next couple of years many additional countries including China, India and Latin America will adopt this new technology.
The embedded microprocessor means that more data can be stored on the card instead of relying upon database access. These new hi-tech cards are favoured by police and governments as they significantly reduce the risk of card fraud.
The new technology isn’t too much of an issue when making purchases in stores or paying restaurant bills as most of these merchant terminals still rely on magnetic strips. The new smart card technology is essential if you want to make use of an increasing number of automatic terminals that are commonly found at ticket kiosks and petrol station gas pumps. Americans who don’t have cards with the new smart card technology would not be able to make use of these new facilties.
Although the rest of the world is quickly adopting the new, high security technology the American banking industry has no immediate plans introduce the new cards. It has been observed that credit card fraud isn’t as big a problem in the United states as its in Europe and other parts of the world.
Another key reason for the delay in adoption of this technology is of course the cost. The estimated cost of introduction has been around .5 billion to rollout the required technology which would mainly be spent on new terminals for merchants.
So it looks like American tourists in Europe and elsewhere will need to make certain they have cash in their pockets rather than rely on their credit cards.
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Tags: american, chip n pin, credit cards, smart card, travel insurance