Boy, talk about opening a can of words ... last week's comments on problems using Bermuda credit cards in England brought more than 20 responses. We'll get to them next week - with apologies to readers who were expecting to see their letters in print this week.

The reason is that MasterCard was kind enough to respond in detail to last week's column, and I need to run that first. Before I do, here is a link to the official UK retailers' guide on accepting credit cards. It says that overseas cards do not require a chip and pin, and must be accepted. I'd suggest downloading it and keeping a copy with your card if you travel to the UK: http://www.chipandpin.co.uk/reflib/Retailer_Post_14_Feb_FINAL.PDF

If you have trouble downloading it for any reason, let me know (crombie@northrock.bm) and I'll e-mail you a copy. I doubt that even this document will help with a recalcitrant retailer or banker who just won't play ball, but it will at least prove that you are in the right.

OK. The balance of this column is given over to what MasterCard had to say. It was addressed to me, but it applies to everyone.

***

Most cards in the UK have already migrated to chip technology. As you are certainly aware, during the adoption and implementation of new technologies there is always a transitory period and information gaps that are eventually addressed once the technology becomes fully accessible.

Although MasterCard has made training a fundamental part of the transition process to chip, sometimes staff of our bank partners and merchants are not able to properly identify and deal with non-chip enabled cards and incorrectly assume that cards without chip are not valid.

We regret the situation you faced during your trip to London, and want to assure you that all MasterCard cards continue to be fully accepted at the 28.8 million acceptance locations around the world regardless of whether or not the card is chip-enabled. Also, as of December 2008, cards carrying the MasterCard brand were accepted at 1.5 million ATMs, as well as other locations where cash can be obtained.

In the unlikely event that other cardholders encounter a similar situation to the one you faced, we advise that they should clearly indicate to the merchant or bank employee that their card is valid, and encourage the branch or store to contact their acquiring bank if necessary.

We also recommend to the cardholder that they directly contact his/her issuing bank and provide detailed information on where and when the incident occurred (name of the merchant, address, date of occurrence, amount). The bank is then equipped with the necessary information to inform MasterCard, who will work to avoid any future similar situation.

We would like to thank you for bringing this up, and want to assure you that we are currently addressing it with our customer.

Please allow (us) to also add that the global payments industry is in the process of a massive migration change to a chip technology infrastructure based on the EMV standard. Cards and terminals using chips are being deployed around the world to improve security and to enable the industry to extend its current success into other areas of payments and new areas of business. Chip technology provides the best security currently available and continues to be the best tool for the payments industry.

For your information, I have included supporting information that I'm sure you will find useful.

MasterCard Chip Solutions

Chip cards use a sophisticated approach to payments. During face-to-face purchase, the chip card communicates with the point-of-sale (POS) terminal. It can validate cardholder identity and record important transaction information. One can make purchases with a chip card using either a personal identification number (PIN) or a signature.

PIN-based transactions offer advantages such as enhanced security and speed. This does not abolish the magnetic stripe and cards that are not chip-enabled should not have an issue with acceptance.

In order to ensure the success of chip cards, MasterCard and other payments industry leaders have developed and promoted a common, universally adopted specification governing the cards, the terminals that read them, and the interaction between the two. They have also developed a set of regulations for chip-card transactions, known as the EMV standard.

As of Q4 2008, more than 395 million MasterCard-branded cards carried a chip and were compliant with the global EMV standard worldwide. In addition, at least 11.2 million EMV point-of-sale terminals around the world now accept MasterCard-branded EMV chip cards.

Market adoption of chip technology has been driven by needs and demands of various regions around the globe. The most common reason to migrate to chip technology based on the global EMV standard is to reduce counterfeit and lost and stolen card fraud, and their associated losses.

How chip cards work

Chip cards use a sophisticated approach to payments. Traditionally, a magnetic stripe on the back of a payment card transmits simple numeric information to the POS terminal when the card is swiped. The terminal then relays the information to a financial institution for authorisation, and the cardholder signs a receipt after approval.

Instead of being swiped to communicate its payment information, the chip card is inserted into a terminal and remains there throughout the transaction. The chip stores the issuer's authorisation rules electronically; it can either approve a purchase offline or ask for online authorisation, depending upon the circumstances.

If applicable, the chip card can also check the cardholder's PIN as an alternative means of authentication. The result of these features is added security, a more streamlined payment transaction, and better customer service. Chip cards are also more difficult to counterfeit than magnetic stripe cards, making them a powerful fraud deterrent.

Security

In regards to security, chip technology provides the best security currently available and continues to be the best tool for the payments industry because it offers the highest level of security when compared to other card security solutions. Furthermore, because of its ability to process data and run programmes, chip technology provides financial institutions with a much higher level of control than ever before in the risk management arena.

While no system can always remain 100 percent secure, we are absolutely certain that chip offers the best possible protection to the integrity of payment card systems, and will therefore best protect the investment being made by our customer banks.

The development and enhancement of chip card technology is following a similar path to the development of other technologies related to the card business. These include the development of technologies like magnetic stripe, hologram, card validation codes, indent printing, etc. All were enhancements that addressed specific new potential threats to the card industry.