Living with credit (555) | New, interesting products (125) | Research, regulation, industry reports (266) | Rewards (48) | Protecting yourself (207) | The fine print (92) | Credit card miscellany (410) | Celebrity Money Watch (9)
Silly American. Your credit is no good here
Do you travel abroad? Don't count on one piece of plastic to carry you through your journey. International travelers are increasingly finding their U.S.-based credit cards may be refused, due to politics, merchant revolts or obsolescence.
Politics: Though it has become a popular destination for European tourists, Cuba remains under an economic blockade from the United States -- a remnant of the Cold War.
By law, Americans can't fly directly to or do business with Cuba. America is also the home base of international banks that issue credit cards -- companies such as Citi and Bank of America and Capital One.
As The Guardian newspaper from the United Kingdom points out in an article published today, credit cards issued by a U.S.-based issuer are routinely refused in Cuba.
Any tourist who expects to buy a refreshing adult beverage at the Hotel Inglaterra in Havana and pay for it with a credit card whose parent company is based in the U.S. will be disappointed. The U.S.-based computer that approves such transactions will say, "No mojito for you."
Merchant revolts: We've written about the smoldering protest movement by gas station owners in the U.S. over how much they pay in "interchange fees" -- the fees that businesses fork over to process credit card transactions.
In the Caribbean island nation of Jamaica, the gas station owners have gone further. As a result, you can't use a Visa or MasterCard to buy gas in Jamaica any more because the station owners' organization refuses to pay the interchange fees.
Jamaica's largest newspaper, the Gleaner, reports that as a result of the dispute, 300 of the island's gas stations are now refusing Visa and MasterCard credit cards. The article's author, senior reporter John Myers Jr., was kind enough to respond to my e-mail and tell me that 300 stations is virtually every gas station on the island.
Obsolescence: Americans carry dumb credit cards. Or, more fairly, we've been perfectly happy for a half century with "Credit Cards v. 1.0."
Those magnetic stripes on the backs of our cards can carry only a few dozen characters of information (see "Anatomy of a credit card"). That's been enough to make a transaction, so for decades, neither consumers nor merchants felt any need to upgrade to newer payment system technology. Our adoption of the latest technology, contactless credit cards, has been slow.
Other countries jumped into the credit card game later. As a result, they adopted later technology, and now it's come to the point where the newer card readers are incompatible with our old, dumb cards.
"In Paris," she says, "the Metro card machines (which give you tickets for subway, commuter rail, and bus) do not accept American credit/debit cards -- I don't think they explicitly say that, but when you try to use them, it won't work."
And one of our executives tells me that while in the United Kingdom a few weeks ago, expanding CreditCards.com's U.K. business, he had dinner with clients. He tried to buy them dinner. Card refused. They accept only "chip and PIN" cards, so no American card can buy fish and chips.
How embarrassing -- an executive from CreditCards.com has his credit card declined because America's credit card technology is behind the times.
They're the pieces of plastic we love, and love to hate. Get the latest news, tips, research and more from the CreditCards.com staff.
Other Voices and Blogs
Subscribe to Taking Charge