Why Your Credit Card Might Not Work Overseas

The next time you go overseas—especially to Europe—don't be surprised if you have occasional trouble using your credit card. Many big European banks have switched to chip-enabled cards that require use of an identification number (PIN) to complete the transaction, and only a very few cards issued in the United States comply with the new European standard. International card networks (American Express, MasterCard, and Visa) require all participating merchants to accept U.S. cards, and many do. But you may still face situations where your card won't work.

This column was suggested by reports of difficulties experienced by American travelers in Europe. Several reported having their cards refused by a local hotel, restaurant, or merchant unless the travelers provided a PIN. After the usual argument, some accepted the American card; others didn't. The worst case came from an American traveling in Scandinavia, who tried to buy a rail ticket with his Visa card from a vending machine in a small-town station that did not have an attendant. He was flat unable to buy a ticket and had to prevail on some helpful local to buy it for him.

After checking with the card networks and a few banks, I've concluded that the U.S. card establishment really doesn't have a foolproof solution to the problem. Here's what they say:

• The party line is that there's no problem: Your U.S.-issued card is good everywhere with a signature and without a PIN. Even though some parts of the world have adopted chip-enabled systems—requiring a PIN—as a means of authentication, magnetic-stripe cards issued in the United States continue to be accepted everywhere the card is accepted, including countries that have adopted chip-and-PIN technology. Most terminals in those countries can recognize a non-chip-enabled card and will indicate when a signature, rather than PIN, is necessary.
• If a waiter, clerk, or agent asks for a PIN, remind him or her that bank and card rules require acceptance of U.S.-issued cards with nothing more than a signature for verification. If the person in question isn't sure how to handle a PIN-less transaction, a swipe of the card in the reader should provide instructions. If your initial contact still demurs, ask to see a manager, and keep escalating the request as far as necessary.

Unfortunately, nobody has a good solution for use at an unattended vending machine or kiosk that requires a PIN. The party line suggestion is to find an attendant, which isn't much help if the nearest attendant is miles away, or use the card for cash in an ATM, then use the cash for the purchase.

Some U.S. cardholders do have PINs for their charge cards, required for cash advances from ATMs. When I asked if travelers who use a PIN for an overseas purchase (not cash) get assessed a cash withdrawal fee, only one bank provided a direct answer: If the charge comes in from a merchant (including hotels, restaurants, airlines and such), the transaction is treated as an ordinary charge, but in other cases it could be treated as a cash advance.

Overall, I've found the responses less than fully satisfactory—probably because this is a situation that falls between the cracks of what should be a uniform international system but really isn't. The system is supposed to work, and when it doesn't, there aren't any good rules to follow.

My suggestions to travelers in this situation:

• If your card is initially challenged, do as the card representatives suggest: Try to get it accepted.
• Take a debit card as well as a credit card when you travel overseas. If your credit card is refused, use the debit card to get cash from an ATM to pay a bill. Do not use your credit card for cash, even if you have a PIN—you generally pay more in the way of fees and charges to get cash with a credit card than with a debit card.