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    Candice Choi

    Chase’s chip technology card may be wave of future

    Chase is rolling out a credit card embedded with a ‘‘smart’’ chip that reduces fraud and is already used widely outside the United States.

    The British Airways cobranded card, available yesterday, is intended to appeal to frequent travelers who may experience hiccups with US credit cards overseas.

    The United States is the only developed country still primarily using credit and debit cards with magnetic strips. The rest of the industrialized world has already switched, or is transitioning, to chip-based cards.


    Chip-based cards are not swiped like cards with magnetic strips. Instead, users insert the cards into a slot then punch in a PIN code to finalize a transaction.

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    Although card terminals overseas also have a slot where magnetic strip cards can be swiped, cashiers in less-traveled areas are sometimes confused by how to process such transactions. In other circumstances, such as at train ticket kiosks, credit cards with magnetic strips can’t be read.

    Naney Pandit, general manager of Chase’s card services, said not having a chip-based card has become a hassle for customers in recent years, as Europe and Asia adopt cards with the chip technology. ‘‘What used to be a trickle a few years ago has become a frequent point of irritation,’’ she said.

    Chip technology nevertheless remains a rarity across the country. Magnetic strip technology is so entrenched that the transition to chip-based cards poses logistic difficulties. Stores have little reason to install terminals for smart cards because banks didn’t issue them. Banks don’t issue the cards because stores wouldn’t accept them.

    But growing concern about fraud could mean chip-based cards will soon be more common. Visa this year revealed new policies that will give US banks, payment processors, and stores incentives to adopt the smart cards, starting in 2015. Visa’s move comes as industry specialists are warning that US merchants may become targets for fraudsters from countries where payment systems have tighter security.


    US banks have recently started offering the cards on a limited basis to high-end clients.

    The British Airways card by JPMorgan Chase & Co., for example, has a $95 annual fee. Earlier this year, Chase introduced two other cards with chip technology. The J.P. Morgan Select card has a $95 annual fee after the first year and the Palladium card, which offers a 24-hour concierge service and travel perks, has a $595 annual fee.

    Other banks began experimenting with the newer technology this summer.

    U.S. Bank gave 20,000 of its travel-rewards customers cards with the chip. Wells Fargo & Co. started testing the technology with 15,000 customers. Wells Fargo said the response has been overwhelming, and it plans to roll out the cards more widely.