NYTimes.com: For Americans, Plastic Buys Less Abroad
American cards lack a special chip, now commonly used in many foreign countries, causing the cards to be rejected by some merchants and kiosks.
The couple’s cards, which rely on magnetic-stripe technology for transactions, lacked an embedded microprocessor chip, which stores and processes data and is now commonly used in Europe. Such chip-based cards — commonly referred to as chip-and-PIN cards because users punch in a personal identification number instead of signing for the purchase — offer an extra layer of protection against the theft of cardholder data and counterfeiting, and they are designed to replace magnetic stripe technology and signature payments.
I noticed this problem when I was in Paris. We were in a hurry trying to buy tickets for the train to the airport and we couldn’t get our credit cards to work when swiped. We had to go to a ticket booth to have our credit card manually swiped.
I think the chip-and-PIN system is a better system because the signature is basically worthless. Who spends the time to sign their name well on a digital screen?