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You're traveling abroad and are having a lovely meal. You attempt to pay with your credit card, only to find out that the restaurant doesn't accept your American plastic because the card doesn't work in its processing machine. Stuck, you dig around in your wallet and magically come up with enough cash to cover the bill.

If you think credit is universal, think again. In Europe and many other parts of the world, credit cards have what the industry calls an EMV chip card. These cards contain "two-factor" identification, that is, it has two mechanisms to prove you are who the card says you are: It can read the smart chip that's embedded into the card, and you have to type in a PIN into a keypad attached to the card reader. This type of authentication makes signing a receipt unnecessary.

The EMV chip card combats payment fraud rates in Europe that are higher than what the U.S. experiences. Because the U.S. has a lower rate of fraud, there's no need to invest money in the equipment needed to process EMV chip cards, says Randy Vanderhoof, executive director of the Smart Card Alliance.

The overwhelming majority of credit cards in the United States are magnetic stripe cards: The card is swiped through a reader, and you sign a receipt to authenticate the purchase. Most of the rest of the world uses the EMV chip card. "The U.S. is the only market that uses the magnetic stripe," says Vanderhoof.

For most people, the magnetic stripe is enough, but if you travel a lot, you may run into problems with not being able to access your credit overseas. Countries that don't use the magnetic stripe don't necessarily have those machines and are unable to make the transaction, says Vanderhoof.

To keep their customers from having to wash dishes to pay for their dinner, some banks in the U.S. have responded to this problem by rolling out EMV chip cards. The EMV stands for Europay, MasterCard and Visa, the three companies behind the specifications of this technology. "Today it's primarily to service U.S. travelers who travel outside the U.S. to places like Europe, Asia, Latin America and Canada. These people are running into problems," says Vanderhoof.

In April, Wells Fargo started piloting an EMV chip card to 15,000 of its consumer credit card customers who travel internationally. Its Visa Smart Card features both a chip and a magnetic stripe so that it's usable in the United States.

"U.S. issuers and merchants rely primarily on magnetic stripe technology," says Eric Schindewolf, vice president of product development for Wells Fargo Consumer Credit Card, in a press release. "However, many parts of the world have adopted chip-enabled payment cards as a primary means of authentication, which has been problematic for customers who travel abroad and were unable to use their credit card."

If you're not one of the lucky ones who's getting their EMV chip cards now and you're going to Europe, you have a couple of options. "First contact your bank and see if they offer it," says Vanderhoof.

The other option is a prepaid EMV card put out by Travelex, a global foreign currency exchange. Vanderhoof says that when customers exchange currencies, they can get the new currency put onto an EMV chip card and have the use of a credit card in another country. The cards are available in both Euros and British pounds and can also be purchased online at Travelex's Web site.

If you go with the prepaid card option, Vanderhoof has a few warnings. "We're recommending that they be wary of this [card] and have a backup payment such as cash, local currency and traveler's checks." You should also be aware of the fees and the interchange rate associated with the card, which can be higher than usual.

Will we all eventually have chip cards in our wallets? "The market is moving in that direction, but it's not moving at a specific pace," says Vanderhoof. "Retailers are slowly replacing old terminals with new ones that have the EVM chip in them. Even if the software [for the system] isn't ready, the terminals are ready."

However, changes in Europe may speed the U.S.' conversion to the EMV chip. Currently many cards in Europe still have both the magnetic stripe and the chip. Vanderhoof says the European Payments Commissions is interested in passing regulation to remove the magnetic stripe from the backs of all credit cards, "which will then create a big problem for Europeans going to the U.S. European banks will then have to issue a separate card." This may pressure the U.S. to change over to the EMV chip more quickly than anticipated.

"In the next year or two, most major financial institutions will be offering [EMV] cards to [certain] segments, to travelers and then to other customers," says Vanderhoof. "As soon as the cards are released in significant volume, merchants will be incented to start using chip readers. But there'll be a transition period over time."