America Needs Proper Credit Cards

A blog about business and economics.
June 12 2013 2:25 PM

It's Time for America to Get Some Proper Credit Cards  

credit card

This is absolutely a First World problem, but it's getting harder and harder to pay for things with credit cards while traveling in Europe. That's especially egregious because given the vagaries of currency exchange, if you have a credit card that doesn't charge foreign transaction fees, that's far and away the best way to pay for things. The problem is that European cards, instead of relying on the hilarious expedient of signatures nobody reads on tiny slips of paper, have a little chip that for security purposes pairs with a secret pin and that's how you conduct a secure transaction. Plenty of European places will let you swipe a card anyway, but lots of places won't, and the chipless cards tend to be useless at automatic kiosks for buying tickets for things.

Banks typically don't do this in America because the chip-enabled cards are more expensive and the all-in cost of fraud turns out to be low, in part because the tax treatment of fraud losses is quite favorable. But obviously the banking sector is not an unmolested free market and the credit card transaction network aspect of banking is one of its very least competitive bits. A regulatory push to get the U.S. to adopt best practices technology in this regard would reduce monopolist rents a bit and reduce hassle costs for everyone else—both from actual credit card fraud and for travelers.

So, yes, it's a First World problem. But the United States of America is supposed to be a First World country. We should have First World credit cards.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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