American credit card users are cavemen in a chip-and-PIN world

Everyone but us, it seems, is using them. They're "chip-and-PIN" cards, credit cards embedded with a smart chip that won't work for purchases unless the owner also punches in their private security code number, or PIN. Designed to thwart fraud, they're just one more example of something Europe is doing that makes us look like relative cavemen.

And as our two methods of credit purchasing diverge, if you want to buy something outside of America, your primitive credit card can cause you trouble. As more countries switch to chip-and-PIN exclusively, Americans' more basic, swipe-only cards end up penalizing and inconveniencing us. Travel writer Ed Perkins reports that lots of travelers report headaches using their credit cards abroad, especially in Europe.

I just got back from a few weeks in Europe, and I can confirm the troubles. The credit card companies will tell you that having an outdated, strip-only card is not a problem most of the time, but it often is. There was never a transaction in which I didn't have to announce to the clerk that my credit card was American and so it couldn't be dipped into the chip-reading hand-held unit on the counter; it had to be swiped at their register keyboard.

At times, I couldn't buy train rides from vending machines because they could only read chip-and-PIN cards. I usually had to wait in a long line at the ticket office to have a live clerk take care of my purchase. But sometimes, such as on weekends, there was no human to do it. Increasingly, American credit card holders are forced to board trains without tickets and pray that they don't incur a penalty fare or a higher charge for buying on board. And woe to the American who runs out of gas and has to use a pump that only takes cards.

There are plenty of places in America where you don't even need to sign anymore for purchases under $25, and I can't even remember the last time I was asked for a photo I.D. when buying something with a card. Not so abroad, where identity theft seems to be more of a concern. British credit card companies claim that despite hackers' claims they can figure ways to be a step ahead of the security measure, PIN technology has cut down on fraud.

Countless countries, from Brazil to Turkey, are putting chip and PIN cards into place, leaving America the odd nation out. Canada is already on its way to adopting the new standard. We're going to be roaming the earth with outdated, relatively insecure credit cards, and the banking industry doesn't seem to care much because, contrary to what you or I may think, it thinks credit card fraud is at a manageable level.

American Express flirted with smart chips in its Blue Card, but that was back in 2003, and it moved to an RFID device that provided the convenience of waving your card over a sensor to make a purchase, provided your store had one. Many users complained about how revealing personal information could now be stored on the card. Adding to its marginal usefulness, many merchants, particularly abroad, don't accept American Express at all. American banks could start offering chip-and-PIN cards if they wanted, but until all merchants are equipped with chip-reading equipment -- and that would take a federal mandate or an industry standard -- chip-and-PIN cards can't protect us universally.

One place where chip-and-PIN fraud is rising (beside skimmer devices) is in environments where the PINs don't mean anything, such as online or -- you guessed it -- in the United States. That means because of our banks' resistance to upgrading to chip-and-PIN infrastructure, America is turning into a haven for credit card scammers from around the world.