Credit Card Security Is Bad News For Travellers

Credit Card Security Is Bad News For Travellers

Security technologies such as chip-enabled credit cards are supposed to reduce fraud. Achieving that goal has come at a high price, however — they’re getting harder to use overseas all the time.

Picture by andresrueda

One of the standard bits of modern travel advice is to dispense with travellers’ cheques and the like, since it’s often easier and cheaper to rely on credit cards to pay for goods and the exchange rates are often favourable, This has long been the strategy I’ve used, but a couple of recent experiences have underlined how anti-fraud measures often make life very difficult for overseas travellers.

I recognise that credit card fraud is rife and that technologies such as chip-enabled credit cards or additional online security systems like Mastercard SecureCode or Verified by Visa are a means of making that fraud less prevalent. Unfortunately, this often comes at the expense of consumer convenience. That’s a fancy way of saying: these technologies often fail completely when you’re overseas (or using an overseas site) and the end result is you can’t use the card to make a payment at all.

My most recent exposure to this was when trying to pay UK supermarket giant Tesco using an Australian credit card which has its own chip and PIN setup. The problem is that the Australian PIN isn’t recognised (as far as I can tell) by any UK retailer, so the signature becomes the only available means of verification. Most stores are OK with that, but Tesco refuses to accept any signature verification (or so the local manager told me). So I’ve got a secured credit card (which is store policy), but they can’t read it, so therefore it can’t be used, despite being backed by an international credit card organisation. The fact that their system is too stupid to recognise an overseas card is apparently my problem, not theirs — though what it means in practice is that I’ll probably stop using Tesco altogether.

A similar scenario often occurs with Verified by Visa and Mastercard SecureCode, two technologies which add an extra password to credit cards to (allegedly) reduce the possibility of fraud. In both cases, the development manuals were apparently non-existent or written in a hurry, because it’s all too common to find that sites can’t utilise them at all, being unable to cope with overseas addresses and returning endless failed transactions as a result. That’s annoying enough if you’re trying to score a better price on a commonly available item, but really frustrating if you’re dealing with a site selling a monopoly item such as train tickets.
When I’ve contacted both my Australian banks to check whether there’s a problem at my end (which is the first suggestion any online retailer will make), the response has usually been on the lines of “We get complaints about this all the time” and “We’ll try resetting the password several times, then it might work”. None of this inspires confidence.

I haven’t yet moved to the stage of entirely shifting back to cash for overseas trips. On the other hand, if this kind of hassle continues, it’s going to prove easier in the long run.

Got your own credit card annoyances when travelling, or tactics to avoid the pain? Share them in the comments.

Lifehacker’s weekly Loaded column looks at better ways to manage (and stop worrying about) your money.


  • The manager of the Tescos that you went to was just being an idiot. I was back in the UK over Christmas and had no problem at all using my card (with the exception of one small camera shop). I’d have been quite happy if Tesco rejected a signature only transaction as I’m sure we’d have spent less on all those “essential” items we longed for whilst in Australia. I’d forgotten that Penguin biscuits pale into insignificance compared to Tim Tams.

    The one dodgy aspect is “pay at the pump” filling stations. I needed neither PIN nor signature, so I could have used anybody’s Australian card.

  • I used my chip-enabled credit card in the States without a problem last year. The only issue I’ve had was when I recently tried to buy a plane ticket on Jetstar’s website; for some reason, the transaction wouldn’t go through. I tried again with a non-chip card and it worked fine. Whether the error was due to a blip on the website or something to do with my card, I’m not sure.

    The chip did protect me when I found out a month or two ago that my card – the one that I took to the States – had been skimmed. Some thief tried to make a purchase in Canada (?!) and my bank immediately blocked the purchase, suspended my account, and sent me a text and an email requesting that I call the bank immediately. This contrasts with an incident a few years ago when someone stole the details of my non-chip credit card to rack up several hundred dollars worth of accommodation and tickets in Europe, and I had no idea until I checked my statement at the end of the month. When I called the bank, they said my account had been “flagged” for possible fraudulent activity, but they didn’t bother notifying me.

    In my (limited) experience, the security benefits of the chip outweigh any annoyances – but then again, I haven’t really travelled enough with a credit card to know for sure.

  • Went through Europe with friends recently. I think you may over-estimate the issues in this article. Only issue I had was taking money out of the ATM in Rome (which is to reduce traveller muggings). Everywhere else (including everywhere in the UK) the chipped credit card worked, as did eftpos, and people were fine with signing also for things. I know that certain stores (not many though) do have issues where their merchant bank provider doesnt have international transaction capabilities, this is likely what you encountered. We were worried before we left about how pins, smart chipped cards and all that would work, but it wasn’t an issue. You need to remember that America doesn’t have chipped cards at all to any decent extent, so I can’t see retailers in Europe wanting to miss out on their dollars.

  • I work at a hotel in Melbourne CBD, and we’ve been having a few issues as of late the other way around – European guests try and use a card with a chip, and it’ll give me an error “Chip Declined”.

    The problem is there is no way around this – we can try and swipe the card but it recognises a chip and then forces us to insert the chip, which will then decline again.

    Very rarely we can ‘cheat’ the terminal by inputting the number manually – but it’s apparently against our merchant agreement so we only do this if they try something like 3 credit cards which have the same issue.

  • I’m heading to Europe for my first overseas trip later this year. I don’t have a chip card but I’m hoping to be able to us my VISA debit card for transactions. Anyone know if I’ll have issues doing that? Also, what’s the go with drawing money out? Do I just choose credit and enter my pin or savings and enter my pin like back home in Oz?

    • You shouldn’t have any problems using a VISA debit card, whether it’s to purchase stuff or withdraw cash from an ATM. VISA is accepted just about everywhere.

      Call your bank – they’ll give you a whole bunch of useful information about what you can do to save money on foreign exchange fees and if there are any limitations to using your card overseas.

  • One lesson from this is *always* have alternative money sources. Take at least two separate credit cards (not copies of the same card – two different accounts or systems – one visa, one mastercard or amex or different banks), plus your normal eftpos card [or have your travel partner have backups]. One is (almost) bound to work. Obviously, it also makes sense to store them separately in different parts of your luggage.

  • Um, really easy solution to all of this. If you’re ever “declined” a purchase because of some technology issue, all merchants have a phone number for manual authorisation for all cards they accept.

    If you can use another card, it’s generally the easiest, but if there’s a reason you want to use a specific card, insist they call the manual authorisation number – including any hotels. If they refuse, remind them that you can – and will – report the incident to Visa/MasterCard/Amex, and the hotel/establishment will be fined for violating their merchant agreement.

    I’ve had to do this a few times, and often the desk person gets nervous with the “fine” term (always delivered in a polite tone), and calls a manager, who sorts it out straight away.

  • I work in a bank and we commonly tell our customers who are going to Europe to put in two zeroes in front of their pin when they use their card overseas. This makes their pin six digits long (00xxxx), which is what they ask for over there.

    • That can help with some ATMs, but wouldn’t help with the PIN problem for chipped cards, since in this scenario you don’t even get asked for a PIN — it just instantly goes into signature mode.

    • Your 6 digit pin code option would not work in the UK as all pin numbers are only 4 numbers not 6. “Overseas” is more than “over there”! Different countries do things differently. I’d be as cranky as all hell if my bank told me to use 6 characters on the pin only to find my credit card locked out because it was actually only 4.

      Most banks these days have relationships with partner banks overseas – I for one would be going to the partner bank first of all if I had problems – they at least should know the local situations and have a clue about your particular bank here in Australia.

  • There is something else you should write a post about – SMS security. I have a uBank account for my savings and a NAB Gold banking because it has no foreign currency or ATM fees. Both of them require that security codes be sent via SMS which means that when I go overseas and use local country SIMs instead of my Aussie one, I can’t do any transactions! RIDICULOUS!

    When in NZ for 2 months I had a spare phone at home setup and had to Skype my family to tell me the security code.

  • I went to Europe with an Australian and US VISA cards and an Australian VISA debit card. No difference between them – they’re all treated as out-of-Europe cards. Outside of your home country a debit card is treated just like a credit card.

    I had my billing address for each of them set to a friend’s address in the UK. This made no difference in most cases, as the card is simply not recognised as being issued by a European bank.

    In the UK, you can’t use your non European cards to top-up a mobile-phone over the air or internet.

    In France, I’ve found toll-roads that wouldn’t accept my cards. Since you may not have local currency when you’ve gotten onto the road, I’ve ended up filling out pages of bill-me-later paperwork.

    No country in Europe would accept my cards at pay-at-pump stations. This can be a dire situation when you’re there during unattended hours on a weekend. In Norway I was lucky enough to find a truck driver who used his card for me and let me give him cash.

    The Travelex cards are also entirely useless. No one at Heathrow would accept one. Even Travelex machines which accept generic VISA cards will not accept Travelex cards.

  • Something really scarry about all the so called secure chip enabled cards is that it is an OPTION for the retailer to enable but not one the card owner can insist on. Ie if you card items at woolworths then these trasactions are send unencoded ( ie unsecure ) to the main office then all your details are recorded in a database and then the details are “hopefully ” sent secure to the bank. NOTE that they are unsecure while at the shop front. Thats so Woolworths and the like can create a database of what Bill Blogs purchased linked to the credit card details. How many tooth brushes, toilet paper and the like…

    When you hear of card skimming .. it can happen at different levels.. Its time Australians stand up to banks about our security of our information. Right now the big organisations are putting all the pressure on the banks to not do so, so they can big brother monitor us.

    And no I’m not a conspiracy theorist just an Accountant

  • Switching back to cash isn’t such a bad idea. 10 years ago, overseas card transactions were done at just 1% worse than the interbank exchange rate. Exchanging cash generally cost 3-5%.

    However, Aussie banks have been ramping the card fees up quietly ever since, to 3+%. You can get cash or travellers cheques for about 1-1.5% fee. The fast, efficient system that is cheaper to provide now costs us more, while physical cash costs less.

  • How’s this for wierd. I have chipped card with no pin. Normally when it asks for pin, it also gives the option for signature (‘ok’), or the retailer has an override button.
    Whilst in NZ in a big supermarket, their system had neither. The checkout chick took my chipped card out of the reader, swipped the magnetic strip, pushed ‘ok’, put the card in UPSIDE DOWN into the chip reader (ie. no chip), pushed ‘ok’ again, swipped it again and it then spat out a receipt for me to sign! What the heck? Does anyone know why/how this works?

  • I am in UK on business fro Australia. This is becoming a huge problem as several of my chip and pin cards fail at Co Op and Tesco pump stations and these will not give you further options. In one case the manager was quite rude. If you are lucky it reverts to sign but this is now rare. Wake up banks and talk to each other.

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