Chip and switch (or bait and signature): the Chip and Signature tease

Alan L saved The Rapid Traveler’s bacon before his putting up a long-planned post suggesting the J.P. Morgan Select Visa Signature Card as the current best answer to US travelers’ woes in the chip and pin realm of Europe. Wikipedia’s entry provides a good explanation of the technology. The practical gist is that a whole lot of US travelers stranded in Europe during the Icelandic volcano chaos found their US-issued cards useless in automated ticket vending machines across Europe. As these machines blanket Europe, travel without a chip and pin card becomes increasingly inconvenient.

US card issuers have teased customers with intimations of introducing chip and pin cards but solid cards have been elusive. The Rapid Traveler thought the J.P. Morgan card was the answer, but Alan L wrote:

…the main ADVANTAGE of Diners Club for Americans is that new North American franchisee BMO will give their forthcoming cards chip and pin, essential for going overseas (and who doesn’t?). Apart from the limited-market United Nations Credit Union, the only U.S.-issued cards I can find that are offering any chip at all have only chip-and-signature, a half-measure alternative to the real deal. One of my favorite teachershad a sign on his blackboard that read, “Don’t Start Vast Projects with Half Vast Ideas.” Words to live by.
A growing number of overseas merchants won’t take swipe cards at all, some take the opportunity to unleash vicious anti-American diatribes against unwary Yanks who wanted only to patronize these establishments, and I have no read yet on how automated kiosks will react to chip-and-signature cards. These kiosks have left untold legions of U.S. travelers stranded at docks and depots and such without tickets that could not be purchased from other sources or by other means. There is similar trouble with pay-at-the-pump at unmanned gas stations.
So until the rest of the credit-card business enters the modern era (American Express told me in writing to forget about chip and pin, and carry cash instead!), get BMO’s new Diners Club card, and don’t leave home without it. Or just don’t leave home.
The Rapid Traveler ignorantly thought all chip cards are the same. Research naturally led to a FlyerTalk thread on thesubject, detailing successes and failures with chip and signature, suggesting workarounds such as requesting a pin from card issuers or entering 0000. The banks claim chip and signature should work almost anywhere, but feet on the ground prove otherwise. American Banker has a disheartening article where the banks, in full weasel mode, claim chip and signature is better for the limited mental capacities of their American customers, arguing simplicity as a virtue over the intended functionality. In the UK, chip and signature cards are available to people with qualifying disabilities that prevent them from operating key pads, which in the estimation of the US banks includes American-itis. They should just come out and say it is all about cost.
sncf ticket machine at Roissy Terminal 3

photo by austinevan

As Alan noted, the humble Diners Club under BMO may be poised for a comeback. The Rapid Traveler has earlier posted about the Diners Club’s quirky selection of airport lounge access and car rental primary collision damage waiver (CDW), and if they ever drop foreign transaction fees this could become a useful card to carry for these specialized purposes. It’s rewards program offers little value for everyday spend, though.

The latest official hint from BMO came in a letter to cardholders in September alluding to “enhanced security features” of the new card, to be distributed in January 2012. (note: Diners Club is not currently open to new card applications)
The Rapid Traveler was going to call to get details but the other day he had to wait 51 minutes for a representative for a question on annual fees for authorized users. Previously he never waited more than 2-3 minutes to speak to a Diners Club representative, so the move to BMO is a work in progress.  The agent was polite and, unprompted, offered 500 points for the long wait. Those desperate for some Diners Club points to top off a balance can experiment with trying to get stuck on a long hold.
Until then, is it possible that Travelex, king of gouging, has the best option? Seems unthinkable.

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  • yaychemistry

    Based upon my last reading of that FT thread (which admittedly I’m not up to date on) it seems to me that the Chip-and-Signature cards have a 50% success rate in places where the old mag-stripe doesn’t work. Given that many chip-and-pin cards also don’t work at every unmanned kiosk depending on which bank/country the card was issued in… I don’t think that the JP Morgan Select is that bad of an option. Now, its certainly far from the ideal option, but I’d still rather use it (and carry cash when it doesn’t work) than get hosed by Travelex. Plus the JP Morgan Select has wide array of travel insurance coverage and no forex fees… So I still might say it’s the best of what we’ve got, despite its significant shortcomings.

  • MHenner

    I thought that Wells Fargo and US Bank had announced chip cards.
    How will those work?

  • Jimgotkp

    I spoke to a Sapphire CSR and she told me the main reason they are Chip and Signature is because the cardholder won’t be responsible for purchases that they dispute. However, companies that have Chip and PIN make their cardholders responsible for all purchases.

  • NB

    Avoid Diners Club in Europe as it is not widely accepted. And, while we’re at it, how about altering US gas pumps so people from overseas (who don’t have 5 digit zip codes) can fill their cars up.

  • NB. Unless i am mistaken, most of the recent Diners are actually Master Cards.

  • Peter

    The point of ZIP Code requirement is to prevent fraud. If it’s removed for non-US issued cards, it would defeat the purpose as presumably CC thieves could use stolen non-US CC data to fill up fraudulently.

    This is why non-US CC has to be swiped at the register and a signature needs to be obtained.

  • S.C.

    I think that it is extremely unlikely when so many countries are on chip but without the PIN that the machines would refuse the cards. I work in Canada (researching chip and signature brought me here); by refusing chip-and-signature they would be turning away every Asian tourist (not ONE card from Asia I’ve come across uses a PIN even if it has a chip) cards from Australia by choice (called PEN or PIN people in Aus. get to choose at every purchase) but usually default to sign, while I had someone from Germany worried about trying to remember the PIN I simply asked her if the card was a chip-and-sign she replied yes so I inserted into the machine pressed enter and got her to sign (yes many cards from Germany based on my experience are chip-and-signature). As mentioned in article some cards from the UK are in fact asking for a signature. Many cards also allow a signature if a PIN is entered wrong three times (not any liability shift from point of merchant). Another point is to be careful of the chip (they break very easily and not as reliable or even as fast to process) and chip override may be tricky if it is even allowed. If the machine asks for a PIN try entering in “0000” which will usually get the machine to check and find out that the card does not require a PIN.

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  • Jenney

    Thanks