Wells Fargo is ready to begin testing a new line of U.S. credit cards that will include magnetic stripe technology, as well as the newer EMV microchip technology that has become standard in credit cards worldwide. The company has announced that it will begin a pilot test of these Visa "smart cards" by the middle of this year, in order to improve credit card security and support travelers who have not been able to use the more traditional stripe cards abroad. This first chip card program by a national bank will include 15,000 Wells Fargo customers who travel internationally.
U.S. lags world standard
Although chip cards embedded with an EMV microchip are widely considered more secure, the U.S. has been slow to adopt this new credit card technology. MasterCard, Visa and American Express all belong to EMVCo, the organization that manages chip card standards, but switching to the new technology is more complicated than simply rolling out new cards. American customers and retailers must also be prepared to handle the new credit card technology, and that means serious changes in the card readers that stores use--a switch that U.S. vendors haven't been willing to make.
While most other developed countries around the world have adopted chip cards, the U.S. still relies mainly on magnetic stripe technology. As a result, those credit cards have become an issue for U.S. travelers, who may find themselves unable to use their card at a foreign gas station or restaurant because they don't have the EMV microchip cards that have become the international standard, and many stores abroad are no longer equipped to process magnetic stripe cards.
Why a chip?
Credit cards with embedded chips are more secure than those with magnetic stripes because the microchip acts as a small microprocessor requiring use of a PIN, and is much more difficult to skim or clone. The new card from Wells Fargo is a step in the right direction toward catching up with international security standards for credit cards.