President Obama had his credit card declined at a restaurant in New York City when he stopped for a bite during the United Nations General Assembly last month.
The president revealed the embarrassment Friday in Washington as he signed an executive order calling for tighter debit card security and enhanced federal measures to help victims of identity theft.
Obama said he tried to explain to the waitress that his card was valid, saying, "I've been paying my bills," to no avail.
"It turned out, I guess, I don't use it enough ... so they thought there was some fraud going on," Obama said, shrugging. "Fortunately, Michelle had hers."
He didn't say which restaurant he had been to.
"Even I'm affected by this," he said at the federal Consumer Financial Protection Bureau, where he was announcing a new government plan to help prevent data breaches affecting consumers.
Concern is growing over the security of Americans' financial data, with an estimated 100 million people having been affected by breaches in the past year, including at big retailers like Target and Home Depot.
According to the plan, cards issued by the federal government will now have an internal chip replacing magnetic strips to reduce the potential for fraud.
In addition, the government will apply the security chips and personal identification numbers, called PINS, that replace signatures to all existing and newly issued government credit cards, Obama said. Payment terminals at federal government facilities will be equipped to handle cards with the new technology.
Obama's executive order also calls for the government to take new measures to help victims of identity theft. The Federal Trade Commission will develop a new website for consumers to report identity theft and remedy errors with credit reporting.
In the wake of the massive data breaches, the financial and retail industries have been at odds over solutions and adopting new security technology. The retailers have insisted that banks must upgrade the technology for the credit and debit cards they issue. Banks have countered that retailers must tighten their own security systems for processing card payments. They say it isn't clear whether the digital chips would have prevented many of the retail breaches.