man handing clerk a credit card - travelEx and money cardsA foreign exchange currency company has launched America's first pre-paid currency card that operates on the "chip-and-PIN" system. The new Cash Passport MasterCard requires a PIN (Personal Identification Number) and signature to work, and since it's loaded with funds before you travel, it's not tied to your bank account, which minimizes loss if it's stolen or hacked.

Chip-and-PIN use has grown to be about more than security or convenience. It's now a necessity for travelers. It's hard to exaggerate just how left-behind America has been when it comes to credit card use. The rest of the Western world has moved past our primitive magnetic stripe cards. Americans with standard credit cards are like, as I wrote on WalletPop last year, cavemen in a chip-and-PIN world.As for fees, if the card sits around unused for 12 months, Travelex deducts £1.75, or currently about $2.76, once a year. If the card is used in a foreign ATM, it's also subject to the fee levied by the owner of that machine, as is any ATM or credit card. Technically, travelers could empty their card by making purchases when they get back home, but because the cards are loaded with a foreign currency, they would be subject to conversion fees, which are also standard to traditional cards.

The new Cash Passports, which are for sale at Travelex stores but will not be sold online until early 2011, will conform to the international standards and although they are pre-paid, they will be accepted anywhere MasterCard is.

Pre-loaded money cards have replaced travelers' checks as the most secure and convenient way to travel with money. While travelers' checks are accepted by a rapidly diminishing number of stores, cash cards are generally accepted wherever credit cards are. Also, because they are only worth exactly the amount that travelers put onto them, they're excellent tools for remaining within a budget.

I travel to Europe often, and over the past few years, nearly all the ticket vending machines have been converted so that they now will not accept a credit card unless it has been embedded with a chip. And nearly no American cards are.

That means that Americans with old-fashioned cards usually have to seek human assistance from a window in order to conduct basic transactions. During the day, that often necessitates waiting in a long line. The problem compounds when the service windows are be closed, as they are so often are because of cutbacks or during off-hours and weekends, and when that happens, Americans are stranded. Likewise, many shop clerks, particularly ones who came of age in the last decade, are unfamiliar with non-chip cards.

Canadian banks made the switch already. But American banks have been loathe to implement chip-and-PIN technology, principally because it costs money to implement such safety measures. It's true that in recent years, crooks have started to crack the code that allows them to filch money from them, too, but they're still leagues more secure than signature-only verification, and the point stands that much of Europe's infrastructure has already been changed to favor them.

Travelex, it's worth noting, is not a bank. It's a for-profit foreign exchange company that's most well known for operating money-exchange kiosks in airports. Has it really gotten to the point where our banks are no longer interested in innovating their products to fill glaring gaps in the market, and that we're relying on money changers to push the envelope?

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