The Sad State of the American Credit Card

Thanks to recent travels in France, I have a new insult … “as useless as an American Express card in Europe.”

Yes, I have a lot of experience with using credit cards overseas … or trying to anyway. It’s best to treat most of Europe as a cash economy when it comes to basic expenses. That has a lot to do with my company’s choice in corporate credit cards and the wonders of the magnetic stripe.

The American Express card, despite its magnificent customer service, is barely accepted outside of the United States. That’s primarily due to higher merchant fees (same reason it’s not accepted everywhere in the US). It’s great for hotels and some high-end restaurants, but fairly useless everywhere else. Be prepared to use your VISA card (hello foreign transaction fees), spend a lot of cash (hello ATM fees) and be treated like a stereotypical tourist when trying to use your AMEX card (hello American stereotypes).

So I find it amazing that my latest corporate AMEX card is equipped with the European ‘chip-and-PIN’ system. That’s the system used as an alternative to magnetic stripes for increased security. It’s a great system, but entirely useless when I take the card in countries where it’s not accepted. So in that case the card feels very secure: no one will bother to steal a card that can’t easily be used.

It almost serves as a spending control, since it means my VISA card doesn’t work in many kiosks or store terminals. I felt like a kid in an arcade, sacrificing tons of coins to win a train ticket back to airport (although a stuffed version of the Eiffel Tower would have also been cool).

Fortunately, some US banks offer chip-and-PIN cards … but not many. Eventually US banks will upgrade their systems, either out of security or as a response to the growth in mobile payments that could threaten their business. It’s not necessarily 100% secure, but neither is carrying hundreds or euros in a country where you lack fluency in the primary language.

I may replace my personal VISA card with one of these travel-friendly cards, especially if they don’t have any foreign transaction fees. But first I need to go through two weeks of cash receipts and Paris Metro tickets. At least I don’t have to spend much time reviewing my AMEX account.