Smart Credit Cards in USA
- Smart credit cards or chip credit cards is a relatively new technology with a higher level of security. This cards are widely used everywhere in Europe and mostly the reason to get that kind of card is to use it for travelling abroad. A couple years ago a lot of Euro countries switched to chip technology, more than 130 countries are using it now. Such cards are equipped with integrated circuit (ICC) unit that stores a security information inside. Although they are widely spread in Europe and Asia, American banks have not been issued them for a long time. Only now the first cards appeared in the market and their number is going to be growing. Chase bank became the first major issuer in US who offered so-called chip and pin cards. Here are a few facts you need to know about smart cards.
- Another name of smart cards is a microprocessor cards, because the chip is a microprocessor component. It contains necessary information about the issuer, card holder, etc. so the reading device can actually get the information directly from the card without a need to exchange information with the bank or a payment system network. Such microprocessors use cryptography and have up to 8 kilobytes of memory onboard. Ordinary card that you are used to has a magnetic stripe and all transactions are verified by your signature. For a chip card all transactions are verified by a PIN number. When you enter a PIN number the reading device can verify if the PIN is correct based on the information that is stored in the chip.
- There are 2 major divisions of smart cards – chip and PIN and chip and signature.
- Chip and signature cards is a strange combination and actually the transactions for that cards are still verified by a signature. That means that this card can be declined in the automated kiosks in Europe- in the ticket booth, on the parking lot, etc. So this type of cards is not a good option for frequent traveller. US Bank has several chip and signature cards, Chase Bank offers - Chase Hyatt, Citi offers a Thank You Premier Card and Hilton HHonors Reserve Card, and Executive AAdvantage World Elite Master Card. Since that cards are not 100% solving the problem of payments in Euro trip we will not go into details of this programs.
- Whells Fargo recently issued 15000 cards to their members as a limited pilot program. The cards were only available for pilots and for those who was invited in the program and now there is no option to apply.
- Chase is the largest bank and major issuer of rewards cards, cards for travelers. British Airways card is a good option at least because there is no big choice around. The card has rather high annual fee of $95, the essential for the travel card is no international transaction fee. A low 15,24% APR is a good sign. Generous opening bonus of 50 000 avios points if you spend $5000 in the first 3 month.
- This card is offered by Andrews Federal Credit Union and is available for everybody just by paying $5. The card has international transaction fee of 1% and a low APR. To get a card you need to become a member of American Consumer Council for free and here you go – you can order the card for you.
- There are two more categories of the cards- contact and contactless.
How Smart Technology Works
Chip and signature
Chip and PIN
It is the most flexible technology that will allow you to pay everywhere in Europe – every transaction is verified by PIN -that can seem inconvenient for the first time, but the benefit is the ability to pay with your card everywhere without limitations. The only problem is that US Banks are still doesn’t have a lot of offers on the table.
Chase British Airways Visa
Globe Trek Rewards Visa
- Contact ones give you additional protection from thefts because they duplicate information on the microprocessor chip. It usually looks like a small square made of gold metal. The same one is on you phone sim card if you use ATT or T-mobile.
- Contactless credit cards make your life easier in terms of small payments like a metro access. PayPass technology allows to make transactions without a contact and pin number. Wireless payments cover $5-50 range. They appeared in 2005-2006 in US, Europe and Asia.
- International Travelers
- People who often travel to Europe already could face a problem of unaccepted US credit cards. The reason is that most vending machines require cards with chip microprocessor and ask you for a PIN to verify transaction. ATM PIN does not work for that. Regular US international credit cards with magnetic strips are still accepted almost everywhere where you can leave your signature, but all ticket booth and gas pumps require a smart card.
- Who win?
- The best chip cards are equipped with both chip and magnetic stripe to provide more acceptance and security at the same time. It’s not yet time to say that old technology will nolonger exist, but it’s time to start adopting a new technology in our everyday life.
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