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Dan Ray

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.
Our prolific blogger Emily Gerson, who chronicled her recent trip to Europe here at Taking Charge, tells me via e-mail that she had her plastic refused while there.

"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.

See related: Anatomy of a credit card, Gas station owners protest interchange fees

4 Comment(s)

fran bestoi said:

i found similar articles on http://www.selectcreditcard.com and cardoffers.com . What do people think about the easiest card to obtain for good credit, credit cards?


I had a similar experience when I was in France, but I had no idea that the situation was like that in Jamaica and Cuba. How long do you think it will take before we start adopting the newer technology? I've only herd vague rumors about it so far. Do you know of any credit card companies that are trying to make the switch?


Dan Ray Author Profile Page said:

Thanks for your comment, Connie.
How long before credit card companies switch to the new technology is the multibillion dollar question.
I remember assigning a reporter to write about the Next Big Thing in credit cards -- smart cards. It was 1999.
They never caught on.
So it's still an open question whether the technology will be adapted. Americans have until now been perfectly happy with their "dumb" cards and haven't seen any reason to switch. Just as importantly, that lack of acceptance has meant merchants haven't been willing to spend the money necessary to make the new RFID technology more widespread.
It remains in experimental / test mode.
I see no compelling reason to replace the plastic in my pocket with something else. Do you?

Until the card industry figures out a way to force you and me and millions of others to swap out our cards, it will remain status quo.


Jay Cunningham said:

There must be a company that will provide a "Chip and PIN" type credit card to an American... Is it possible to open a bank account with a UK or French bank that has an office in the US (like Barclays)?


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