Editorial Policy

AAA joins push for chip-and-PIN

Marcia Frellick

September 17, 2012

The largest travel organization in the United States is trying to make things a little easier for its credit card users who charge purchases internationally.

The American Automobile Association (AAA) has is rolling out an EMV credit card. EMV stands for “Europay Mastercard Visa” and refers to the chip-and-PIN technology that’s already common throughout the rest of the world. Magnetic stripes are still the norm in the U.S., although some issuers, including Bank of America, Chase, Citi, U.S. Bank and Wells Fargo, have begun adding EMV chips to certain cards.

AAA’s move is aimed at helping U.S. travelers who often find when they leave the country that machines abroad — such as train ticket kiosks — won’t accept their magnetic stripe cards.

What’s different about EMV cards?
Some things won’t change: AAA’s chip cards will continue to prompt customers to sign for some transactions, and they will still have a magnetic stripe (in addition to the EMV chip) to make them compatible with U.S. merchants.

Yet the addition of an encrypted microprocessor chip will help the U.S. catch up to Canada as well as countries in Europe, Africa, Asia and Latin America, which are way ahead with this technology.

“Chip-enabled cards will expand purchase options, add convenience and transaction security for Americans traveling abroad,” said Siobhan O’Donnell, director of AAA financial services sales and marketing, in a press release.

EMV cards are also generally considered safer because cardholder data are stored within the chip, and transaction data are encrypted uniquely each time the card used, making EMV cards difficult for scammers to hack, skim and clone.

AAA’s new EMV cards will be issued through AAA’s partnership with Bank of America, which announced in July that it was making EMVchip cards available to its customers. If you have a AAA credit card already, you need only call the customer service number on the back of your card to get the EMV version. Chip cards will be rolled out for new cardholders later this year.

Adoption accelerating
The move to EMV has come at a snail’s pace to the U.S. as card companies have been slow to push for the cards as retailers were reluctant to pay for overhauling their payment infrastructure. Conversely, retailers were slow to change because they didn’t know whether card networks would make the move. That started to change last year.

Visa led the charge in August 2011 by offering incentives to retailers to make the switch. Now MasterCard, Discover and American Express are developing their own plans to get retailers to start updating their systems to accept the cards.

Another reason for the push: EMV card readers allow contactless payments. Instead of making direct contact via a swipe, the card can be tapped or waved near the payment terminal. Payment terminals that can do this are also compatible with near field communication (NFC), the technology that allows consumers to make payments with their cellphones and that happens to be the basis for several emerging mobile payment applications.