When my Visa and Amex cards were declined it was because we were in a high-fraud area. Many of these will only accept the newer card format. If you travel overseas, you want a chip-and-PIN card, especially when you use trains or subway systems that allow payment for service. The chip-and-PIN systems will be standard in the United States by 2015 because a new law that shifts liability to merchants and banks if they do not implement the more secure technology. Wireless handheld terminals are used by merchants to process transactions more securely than is possible with a mag stripe. The card is theoretically more difficult to use by a thief or unauthorized individual who does not know the associated PIN. These Chip-and-Pin cards, known as EMV (for Europay Mastercard Visa) offer several advantages for banks, merchants and consumers and are authenticated by a four-digit PIN rather than a signature. This system increases the security of the card and reduces the ability to defraud the system by encrypting cardholder data within a chip that is embedded within the card and which resembles the SIM in your smartphone. While the credit card companies have enhanced their fraud protection programs, losses from counterfeit cards, skimming of numbers, cloning and other techniques still plagues the industry.Įurope and the rest of the world are way ahead of the United States in its ability to combat fraudulent losses because they introduced a newer card technology several years ago. The decoded information can then be re-encoded on another credit card and used to make purchases from merchants. The problem is that the magnetic bits of information are very simple to decode and replicate with inexpensive parts from almost any electronics store, even Radio Shack. Your name, card number, expiration date and other information is available for terminals to process. There are millions of point-of-sale terminals in the world and all of them can read the magnetic tracks on the back of every credit card. Beginning in the 1960s, cards were issued with a magnetic stripe to carry encoded cardholder information on three invisible tracks within the stripe. Presently there are two primary credit card technologies in the world. So if you travel to a country that is known for fraud activity you can run into problems when you try to use your credit card, and it has nothing to do with your credit limit.
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