Yes, in the USA we still use magnetic strip on credit cards.

I’ve had some interactions with some people online more than once when I found myself explaining this. One of the more recent incidents was about a phone that used magnets to keep something in place. I had commented that with such a phone I want to make sure that it didn’t get near my bank cards because of the magnets. I received responses of confusion from this. I’ll address some of the frequent responses.

• Why does it matter if it gets near a magnet?
  – If a credit card is in contact with a magnet that is strong enough or for long enough then the data on the strip can be damaged making it unusable in magnetic strip readers.
• Why not use contactless payment?
  Banks in the USA for the most part don’t issue contacless cards. I’ve checked for them and have found they do exists if you get a very “product” from that bank. For example if you have a card from Main Street Bank Visa (a bank name I’ve just made up) then it might not be contactless, but if you got the Main Street Bank Visa Barbie Edition (also a made up card) then it may have the contactless feature.
• Why not use the Chip and Pin
  The chip isn’t accepted at some POS terminals. For credit cards in the USA we almost never use pins. For bank cards associated with a checking account though a PIN must be entered if the card is processed as a bank card instead of a credit card. High volume stores including fast food also prefer not to use the pin. The amount of money they can make is heavily dependent on how quickly they can complete the purchase process and they risk loosing money on missed sales than fraud at heavy times.

Typically, people in the USA that do have experience with contactless payment have it through Apple Pay or Samsung Pay. While Android Pay had been present years before it was hamstrung by three of the four nationwide phone carriers here. They decided to block Android pay and created their own payment system. Their system was called ISIS and based on the American Express SERVE cards. But things happened in the news and the ISIS name was no longer a name that was marketing friendly.  They changed the name to Softcard but the effort ultimately failed.

I myself was able to use Android Pay for some time since I had a Google phone that wasn’t distributed through the carriers. It worked fine until Apple Pay was released. When Apple Pay was released many major retailers decided to deactivate their contactless receivers. They wanted to have in on mobile app payments and they blocked such payments all together. Now, if I entered a store even if I could visually identify that a contactless payment terminal was present I didn’t know that it worked. At one point it failed more times than not and it was easier to just not bother with it.

Why not use the app that the retailer made instead of the phone payment app? There are two reasons. The first, is the retailers didn’t have such an app. They were starting development of their systems and blocked other contactless payments while they prepared their own. When such apps were available my personal motivation was that data breaches happen regularly and it is safer to minimize the number of accounts in which personal information appears. Even when an account is closed in the USA retailers may often retain records of the information; it is still vulnerable to a breach after an account with the retailer has been closed.

With that said, I’m hoping to see a shift in how credit cards are handled in the USA. There’s a high rate of credit card fraud in the USA and several times within a year my associates and I find that we must get a card replaced because of data breaches.