Do EMV Chip-and-PIN or Chip-and-Signature Cards Work in the US?

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by on October 29, 2013

Wouldn’t life be easier if we were all on the metric system? Or if we all used the same currency? Or if there were one global language? As the world shrinks and we move toward greater globalization, businesses need less red tape to thrive. And as we evolve into a paperless society, credit cards carry immediate spending power.

Unfortunately, credit cards haven’t reached universal acceptance. Plastic in the States isn’t the same as plastic in Europe. Though the cards are identical in size and shape, the technology used to transmit account information varies by region.

Magstripes vs. EMV Chips

In the United States, credit cards transfer information via “magstripes”–the black magnetic stripe on the back of your card. These stripes, which are made of tiny iron-based particles that communicate with card readers, are the status quo in the U.S. They are not accepted worldwide, though.

There is another type of credit card technology on the rise. Many countries–including 73% of Western Europe–have already adopted the new standard. Instead of relying on magstripes to transmit info, EMV credit cards are embedded with a tiny microchip that serves the same function. The microprocessors provide greater security than magstripe cards.

Though the world is well on its way to making EMV cards standard, the United States has been dragging its feet. The main reason, as you might suspect, is money. The estimated cost to replace American credit cards is $3 billion, and the cost to replace payment terminals is $2.5 billion.

EMV Cards in America

It was only a few years ago that credit card issuers began offering EMV options to American consumers. The smart chip has been marketed to Americans exclusively as a travel perk, because it’s currently not needed for domestic purchases. Holding a chip-and-pin or chip-and-signature EMV card increases the spending power of Americans abroad. When visiting a country like England, where EMV cards are the norm, having a card that functions seamlessly with the local infrastructure is a boon for travelers.

While Americans sometimes have trouble making purchases overseas, visitors to the States don’t have to worry about their cards being refused. Cards with EMV chips–whether American or otherwise–are also equipped with magstripes. Magstripe cards don’t always have EMV chips, but EMV cards always have magstripes. Yes, EMV cards do work in the United States.

Though Visa reported more than 1 million U.S. chip-enabled Visa cards in 2011, that’s still a small percentage when you look at the overall picture. The truth is, America isn’t ready for the transition to EMV exclusivity. Before our credit cards can be converted, we need to put the infrastructure in place.

Fortunately, credit card companies are offering incentives to merchants to upgrade their card readers for EMV compatibility. Visa and MasterCard are cutting deals with merchants who upgrade to EMV card readers early. Eventually, those benefits will turn into penalties. For example, in 2017, Visa and MasterCard will shift fraud liability at automated gas station fuel dispensers to merchants who don’t upgrade their machines.

Though EMV has years before becoming standard in the States, it doesn’t hurt to be an early adopter. There are a number of worthwhile credit cards that come equipped with smart chip technology. If you’re in the market for an EMV card, check out the Chase British Airways Visa SignatureChase Hyatt Visa SignatureUS Bank FlexPerks Travel Rewards Visa or  Citi HHonors Reserve.

Credit card image via Shutterstock

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