From The Australian, Wealth:
CONSUMER NEWS: Your credit card might not work overseas, Ed Charles reports | September 19, 2007
AUSTRALIANS may be enjoying the Rugby World Cup in Europe but many may find that they will have trouble spending any money on their credit cards.
The problem is that in Britain and Europe, credit cards that contain microchips and require a PIN rather than a signature have become the norm.
Through ignorance, many merchants are now rejecting cards with magnetic strips as are commonly used in Australia.
Britain moved to the chip and PIN security system on Valentine’s Day 2006 in a bid to clamp down on its growing credit card fraud problem. One Australian reader recently in Britain for five weeks reports four occasions where a credit card was rejected.
The reader, who wishes to remain anonymous, says that a gold credit card from the NAB was rejected in a grocery store, two petrol stations and at lunch in a large chain of fish restaurants.
The petrol stations, all part of a national chain, had the sign “No chip, no pin, no sale”.
Through internet forums there are other reports of cards being rejected in France, Denmark, The Netherlands and Switzerland.
The problem also affects travellers from the US, where micro-chipped cards are yet to replace magnetic strips.
“My complaint is not that NAB doesn’t have a chip, but that they do not inform customers their card may be useless in some overseas countries,” says the reader, who luckily had a chipped ANZ card available to use. The couple complained to NAB that it didn’t inform them about some of the problems in using magnetic strip cards abroad, but got no response.
A Visa spokesman admits that there is confusion in the acceptance of cards with magnetic strips in Britain and across Europe, but plays down the issue.
Through several layers of navigation on the visa.com.au website, “very important payment tips to customers” are offered.
The website says it is also aware of acceptance problems in France, though this is little consolation to Australian travellers who face language barriers in non-English speaking European countries.
Visa says travellers should not be concerned about payment card acceptance at any location in Britain displaying a Visa logo.
“All merchants displaying a Visa logo are required to accept any form of Visa payment that is properly presented to them,” it says.
“In Britain, this means merchants will continue to accept foreign-issued, non-chip and PIN cards as before.
“Visa is committed to enforcing this policy to helping maintain cardholder trust and confidence in Visa’s promise of unsurpassed global acceptance.”
According to APACs, Britain’s payments association, travellers may find that acceptance of all international brands is not as widespread in France and Germany as it is in Britain.
For instance, only about 30 per cent of German retailers accept international cards. Regional locations, which are off the tourist track, are also likely to cause problems, it says.
According to Commonwealth Bank general manager of consumer finance Scott Hendricks, the bank has received complaints but none recently.
He says the bank has been briefing frontline staff to educate customers. Also when it receives information, through Mastercard or Visa, the merchants are advised of their error.
ANZ has more than 1.7 million chips cards in the market, having been the first to introduce products in Australian around 2001, according to the bank’s general manager consumer cards, Steve Rubenstein.
He says that while ANZ chipped cards will be recognised by card machines, customers are also advised to take PINs abroad to ensure they can use their cards.
Rubenstein says that even chipped cards that use a signature for security are more secure than magnetic stripped cards as terminals will recognised if they have been cloned and are fakes.
Westpac was the most recent to announce the introduction of chipped cards and from this month Commonwealth Bank is introducing chips on all replacement and new cards.
“We are about to start issuing all of our new and replacement cards with the chips element included to improve the security. That clearly will address any of those acceptance issues overseas,” Hendricks says.
He says that all magnetic strip cards are required to be accepted overseas as required by the Mastercard and Visa schemes.
“You may have a casual 16-year-old shop attendant working in Toulouse or Liverpool who may or may not be aware of that,” he says.
“The reason it has taken the Australian market longer than some other countries was really product for the business case, which has been driven by levels of fraud. And fraud in the Australian market relative to other markets such as Malaysia has been much less of a problem.”
The NAB says it will introduce chips on cards but is the only one of the big four banks yet to release a date publicly.
All other banks have announced policies for the introduction of chipped cards.