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Do chip-and-PIN cards work in the US?

Cathleen McCarthy

Dear Cashing In,
Do "chip-and-PIN" credit cards work in the U.S.? -- John

Dear John,
If the cards were issued in the U.S., they will work here because point-of-sale terminals will read the magnetic stripe and ignore the embedded microchip. The same is true of cards issued overseas -- unless the issuer chooses to ignore the mag stripe, which is happening more frequently.

Even though the default payment system in the country of issue may be to read the chip, a terminal or kiosk without that capability will usually default to reading the magnetic stripe. The same rule applies with chip-and-signature cards.

Most credit cards with embedded chips issued in the U.S. are chip-and-signature, but a few credit unions are issuing chip-and-PIN as well, as you can see from this list of EMV cards available in the U.S . At this point, most chip cards issued here are produced for international travel, since most terminals in the U.S. don't yet have the capability to read embedded microchips at point of sale.

Chip technology is currently in use or is being implemented in more than 80 countries, including Canada, Mexico, much of Asia and most European countries. Stateside, businesses are quietly revving up to do the same, producing and installing chip-enabled terminals even as we speak. Given the scale of our retail infrastructure, that isn't going to happen overnight, but you can expect to start inserting instead of swiping here by early next year, I'm told.

In fact, you may encounter terminals already accepting chip cards in the U.S., though they are rare. Migration to EMV -- the global standard for embedded-chip technology launched by EuroPay, MasterCard and Visa -- is happening so rapidly in the U.S., changes have taken place even since my story on this (" U.S. rolling out chip card technology, ever so slowly ") went live in June.

Randy Vanderhoof, executive director of the Smart Card Alliance, tells me many terminals already have microchip readers installed and owners are just waiting for the go-ahead to enable them. "I think we'll see the number of store locations accepting EMV cards to start to increase after the end of the year, probably sometime after January 2014," says Vanderhoof. "It's not going to happen by end of 2013 because EMV migration has been slowed by some regulatory issues that still need to be resolved."

Holders of chip cards issued in other countries may have a tough time using them here until that shift occurs. Credit card crime has been migrating from EMV countries to the U.S., where the pickings are easier -- which in turn has made some overseas card issuers skittish about U.S. transactions.

Chip-and-PIN cards issued in Canada will work in the U.S., for example, because the mag stripe will work. "But there are some foreign financial institutions that are blocking the use of mag stripe on cards used in U.S.," Vanderhoof says. "An EMV card issued in France may have a mag stripe on it, but if the card gets declined when the cardholder tries to use it, that could be because the issuing bank in France has blocked use of that card's mag stripe in the U.S."

According to Vanderhoof, the fear for the issuer is that a thief could skim a customer's mag stripe in their home country, create a counterfeit card and then use it in the U.S. without the customer even leaving home. "If they see too much fraud coming from the U.S., they will block the card," he says.

See related: Headed overseas? Get an EMV chip card , Do I need a chip card in Africa? , The best card for a long stay in Vietnam?