The recent data breaches at Target, White Lodging, Michaels, Home Depo and Neiman Marcus proved just how vulnerable old-school magnetic stripe cards can be. Could the more-secure EMV chip technology that’s become the standard internationally be the answer?
As a countermeasure to thwart fraud, EMV “smart card” technology (a joint effort of Europay, MasterCard, and Visa) was concocted in the 90’s and rolled out during the 00’s throughout the world … but not in the USA. Although some cards with EMV chips have been making their way to the U.S. market, it’s been a slow trickle.
Why? Well, there isn’t exactly a huge demand for them. Unless you’re traveling abroad, you don’t really have an everyday need for a chip card, as few merchants have upgraded to payment terminals that accept them. Add in the fact that chip cards a more expensive to produce, and you wind up with three parties (consumers, merchants and issuers) who haven’t been in a big hurry to make the switch.
Those attitudes could change, though, now that millions of consumers have had to have their compromised magnetic stripe cards replaced in the wake of the breach.
How EMV works
EMV cards thwart some of the most common ways thieves clone cards and steal data. They come equipped with a microprocessor chip that encodes the information transferred to the merchant, such as account numbers, differently with each transaction. So, even if thieves manage to get data from a merchant (as they did in the Target breach), it’s like stealing an expired password — useless. EMV chips are also tougher to clone than magnetic stripes are.
While EMV technology won’t make data theft disappear (several successful breaches overseas are a testament to that), it does up the ante for thieves, making their job harder — when it comes to card-present fraud, that is. EMV technology doesn’t do anything about online fraud, unfortunately. So, if your card information is stored in an online shopping account or other website and that information gets compromised via a bug like Heartbleed, or a colossal hack (like the recent Russian cybergang hack that compromised 1.2 billion online login credentials), the little chip on your card won’t protect you. The only thing you can do is have hard-to-guess passwords and change them often.
The EMV cards being rolled out stateside are a bit different than those rolled out in other countries. Most U.S.-issued cards use what’s called “chip and signature“ technology, while the EMV cards being issued overseas generally use “chip and PIN” technology. The chip and PIN cards require the cardholder to type in a PIN to complete a transaction, making it difficult for a thief who gets ahold of the card to use it. Although chip and signature cards still have the more-secure computer chip, they require a signature for the transaction, rather than a PIN.
Update: JPMorgan Chase announced in February 2014 that it would start issuing chip-and-PIN (not just chip-and-signature) cards later in the year. Target has promised PIN on its REDcard in 2015. The Apple Rewards card from Barclaycard is chip and PIN. And select cards from Wells Fargo, the Barclaycard Arrival Plus World Elite MasterCard and the Sam’s Club card now have the ability to function as chip-and-PIN cards, when required.
EMV to the rescue?
Even if the millions of consumers burned in the most recent rash of breaches start clamoring for EMV cards, those cards will offer no extra defense unless retailers update their equipment. That will cost merchants money, but the card networks (Visa, MasterCard, AmEx and Discover) are giving both them and card-issuing banks an incentive to upgrade by October 2015. At that point, the networks will institute a “fraud liability shift.” That’s a fancy way of saying “adapt or pay.” If a consumer’s card is involved in fraud, whichever party involved in the transaction (the bank that issued the card or the merchant that accepted it) that didn’t upgrade to EMV will be held accountable.
Although everyone has until 2015 to upgrade, quite a few financial institutions are already rolling out EMV cards. Given the prevalence of EMV throughout the world, banks have realized that smart cards are a travel benefit that can be touted, just like travel insurance and no foreign transaction fees. Many of the major issuers have them, as well as some credit unions (including Pentagon Federal, State Department Federal and Andrews Federal).
Where can I get one in 2014?
Use the chart below to find out which issuers are providing EMV chip cards for Americans. This list is periodically updated as new cards come onto the market. Please note that technically speaking, most of the cards issued in the US are chip and signature. A few, however (for example, the Barclaycard Arrival Plus World Elite MasterCard and the Sam’s Club 5-3-1 card) have PIN capabilities. That means you can set a PIN, allowing the card to be used in situations where a PIN is required (generally at unmanned payment terminals abroad). That being said, even signature-based EMV chips will still work with most international merchants (a possible exception being unmanned terminals at gas stations and tollbooths). If your card is in the chart, but doesn’t have a chip, you can request a new one from your issuer.
Read on after the chart for a closer look at some chip and PIN cards that are particularly good for travelers.
Compare U.S. EMV card offerings
|Financial institution||U.S. cards with chips||Other details|
|American Express (a CreditCardForum advertising partner)||Various consumer, OPEN and corporate cards, including Delta SkyMiles||By request only, after approval|
|Bank of America||Merrill Lynch-issued cards; BankAmericard Travel Rewards; BankAmericard Cash Rewards; airline cards for Virgin Atlantic, Alaska and Asiana; Royal Caribbean and Norwegian cruise line cards||Automatic on new Merrill Lynch, BankAmericard Travel Rewards and Virgin Atlantic card, and for existing cardholders identified as international travelers. Request chips on other cards by phone or at a banking center.|
|Barclaycard||Hawaiian Airlines World Elite MasterCard; Barclaycard Arrival; Plus™ World Elite MasterCard® Apple Rewards card||Current card holders with older version of Barclaycard Arrival Plus World Elite MasterCard must request a replacement. Barclaycard Arrival Plus will have ability to set a PIN.
Apple card is chip and PIN.
|Capital One||Select cards, including Venture and Venture One||Plans to implement EMV on most of its cards by end of 2015.|
|JPMorgan Chase||Sapphire Preferred, Chase Freedom, Ritz-Carlton Rewards, Hyatt Credit Card, JPMorgan Palladium, British Airways Visa Signature, Marriott Rewards Premier||Also available on Select card, which is discontinued for new applicants. Chase announced Feb. 2014 that it would start issuing chip-and-PIN cards this year.|
|Citi||Citi ThankYou cards, Hilton HHonors Reserve, AAdvantage cards, Dividend cards, Prestige, Expedia+ and Expedia+ Voyager, Double Cash|
|Discover||It cards||Available upon request.|
|USAA||Available for members traveling overseas.||Call customer service to request.|
|US Bank||FlexPerks Travel Rewards, SKYPASS cards (Visa Signature, Classic and Business versions)|
|Wells Fargo||Propel World American Express and some Visa cards|
|Synchrony Bank||Sam's Club 5-3-1 card (released June 23, 2014); Wal-Mart MasterCard (as of Sept. 2014)||Sam's Club card will have the ability to set a PIN. The non-MasterCard version of the Wal-Mart card does not have an EMV chip.|
|Diners Club||Diners Club Card, Carte Blanche Card, Diners Club Card Premier, Diners Club Card Elite|
Best EMV cards for travelers
Citi Hilton HHonors Reserve
This is another EMV chip credit card that Citi recently launched. It also has no foreign exchange fees.
The rewards are 10 points at Hilton Hotels worldwide, 5 points for airlines and car rental agencies and 3 points for all other purchases. The $95 annual fee can be worth it, considering that you get complimentary HHonors Gold status and one free weekend night every membership year you spend at least $10,000.
Right now, using the link below you get two weekend night certificates good at participating Hilton properties, after making $2,500 in purchases within four months of account opening. The annual fee is $95.
British Airways Visa Signature Card
Chase was the first major U.S. bank to make chip and PIN compatibility a priority. One of the first cards they added this feature to was the British Airways Visa Signature (since 2011). The rewards program on it is pretty good: 1.25 Avios points per dollar on regular purchases and 2.5 Avios on British Airways purchases.
Don’t fly British Airways? You can redeem points with their partner, American Airlines, for domestic flights in the U.S. There’s no dilution in point value when you do that, so it’s a great deal.
Other benefits include no foreign transaction fees and a British Airways companion ticket (aka “Travel Together” ticket) every year you spend at least $30,000 on your card. The annual fee is $95.
American Express Platinum Card
You can request an EMV chip version AFTER you’ve already been approved, received the regular version in the mail and then activated your account. There’s no additional cost for this request.
The annual fee is $450, and it’s NOT waived the first year. So be prepared to pay $450 on your first billing statement. This may seem expensive, but trust me, if you travel a lot, the benefits are well worth it. A few of the most impressive perks are:
- $200 per year in airline fee refunds for qualifying airlines – Receive up to $200 in statement credits every year for reimbursement of baggage fees, in-flight meals/entertainment, flight-change fees, etc. You can choose one qualifying airline for this each year.
- Airport lounge access – Cardmembers get a complimentary Priority Pass Select membership, which allows access to more than 600 lounges worldwide. In addition, you get access to participating Delta Sky Clubs when flying with them and Airspace Lounges at JFK, CLE and BWI. Last but not least, you also get into the Centurion Lounges at LAS and DFW, the first of several American Express airport lounges that will open in major US cities.
- Valuable benefits at numerous hotels – Through the Fine Hotels & Resorts program, you can get free room upgrades, 4 p.m. late checkout and more when available at many participating properties.
- Convert points to frequent flyer/hotel programs at a 1-to-1 basis – Convert your Membership Rewards to various frequent flier accounts, including Delta, Virgin Atlantic, British Airways, Frontier, Air Canada, AeroMexico, KrisFlyer, KLM/Air France, Iberia, ANA and more.
Get 40,000 Membership Reward® points after you spend $3,000 in purchases with your new card in the first three months. American Express is a CreditCardForum advertising partner.
Updated Dec. 2, 2014