Signing for credit card purchase seems like something from an earlier time. Your transaction is all digital, but it’s not complete until they hand you a little scrap of paper for you to write your name on like a contract? It feels a bit odd that this is still how we’re doing things in the 21st Century, right? You might never touch a paper dollar in your daily life, but when you pull out the credit card, it’s time to sign a little receipt.
What’s the purpose of it, anyway?
If the transaction is legitimate, then there should be more than enough data to prove that. If the transaction is not legitimate, then it’s not as if signatures are hard to fake.
In fact, do they even check signatures for every single receipt?
And is it any more difficult to commit friendly fraud thanks to signatures?
It’s not hard to tell everyone that someone faked your signature, or just misspell your own name on purpose if you’re planning on ripping the merchant off. What we’re getting at is simply that signatures don’t make a lot of sense as a security measure.
To put it one way: They’re not worth the paper they’re scribbled on.
And yet, many credit card companies persist in using ink and paper signatures when it really isn’t going to be that big of a help in keeping merchants and customers secure and safe from fraud and theft.
Fortunately, there are a few companies out there looking to make a change in the industry. If nothing else, you’ll have a few less scraps of paper cluttering up your pocket or purse.
Here’s what you need to know about changes to signature standards and protocol in the credit card industry:
Signature Requirement Changes In The Industry
American Express and MasterCard have proven trendsetters in the field, being among the first to switch to signature-free transactions via credit card. MasterCard rolled out the changes in April of 2018 after announcing them the previous October. Previously the brand had required merchants to ask for a signature at point of sale, and this is no longer necessary in the US and Canada.
Discover’s VP of Global Product Innovation, Jasma Ghai, announced that the change owes directly to new technology in the field. Tokenization and chip technology in particular were cited as security standards making signatures by hand effectively unnecessary.
An announcement like this was expected in 2017, of course. Those who follow financial security made note of EMV-enabled systems for point of sale. EMVCo. says that EMV has essentially become the standard in the industry, being adopted by Visa, JCB, American Express, MasterCard, China UnionPay and Discover. The technology is a mix of new and old, but availability is key. More merchants than ever before are able to offer the highest standards of security at no extra cost to themselves or to the customer.
Analysts say that PCI-compliance has been evolving, as well.
Basically, PCI-compliance is getting faster. Same-day ACH payment processing, efficient payment gateways, there’s been quite a bit happening in the last year alone that has helped to make electronic verification faster and safer than it has ever been in the past.
This is all to say that signature-free credit card transactions are now becoming the norm simply because the technology has made it more difficult to hold on to the conventional pen-on-paper form of verification.
Whenever there is an industry-wide change that seems to be a long time coming, there will be a time when it simply can’t be held back any longer, the floodgates finally break and a change that was years in the making seems to roll out overnight.
Signature Requirement Changes: What Does This Mean For Merchants?
The first and most obvious benefit of paperless credit card transactions for merchants: They’re paperless.
Simply not having a thousand extra scraps of paper to file away at the end of the night will save you a lot of time and energy in your day to day work of running your business. Not having these papers lying around will also help to keep transactions more secure. It’s not uncommon for a receipt to be misplaced, and when that happens you could be looking at a serious liability concern.
Secondly, the fact that the industry is ready for totally paperless credit card sales owes entirely to just how secure electronic transactions are now. This means you have fewer security concerns to worry about in general. This means it’s harder for people to defraud you, it’s less likely that you’ll face liability issues of your own, and you’ll have a few less T’s to cross and I’s to dot on your own time.
Essentially the whole business is safer, and that’s good news for everyone.
If you’ve read The Tipping Point, then here’s another benefit that’s easy to guess at: Shorter lines.
We’ve all been there. If you work in retail, you’ve had the customer who’s on their phone with one hand, digging through their purse with the other, and now they have to do a juggling act to be able to sign the receipt for their credit card transaction.
Meanwhile the line behind them is getting longer and longer. Each one of these extra-long transactions might only add an extra minute to the workday, but it all adds up. And then of course you add in all of the little bits of added seconds.
It might only take five, ten seconds to rip the receipt, hand it to the customer, hand them a pen, wait for them to sign, and then hand everything back so that your cashier can tuck the receipt safely into the cash register.
But… again, it adds up. With a chip card, the whole transaction might be over and done with in the time it takes for that one extra step to take place.
At a certain point, micromanaging every last second of the day can get to be a bit much. There’s only so much that you can do to shave time off of each task before you’re spending more time and money and creating an environment where any worker smart enough to do what you want is going to be smart enough to leave and look for a better job.
But when you can automate it, when you can let the machines shave those seconds off for you, why not?
By shaving off a few seconds here, a few seconds there, all-digital transactions will help to make the whole day go a little more smoothly without as much capacity for human error in each transaction.
What This Means For Customers
Even if you’re reading this as a merchant, chances are you do some grocery shopping of your own now and then.
So what does this mean for you when you’re the one waiting in line?
Well first of all, all of the things that we listed above will benefit both parties involved in any transaction.
Lines will be shorter, you won’t have to stop and sign something every time you pick up a soda pop at the convenience store, you won’t have to worry about them losing your receipt and having someone running around with bits and pieces of your information, and the whole thing is just safer for all parties involved.
An additional benefit for customers: You can go as digital as you like.
We’re shifting towards a totally paperless economy here. Once upon a time you had to run one of those big printer thingies over a credit card to make an imprint of it, and then you’d have to walk around with this thin, inky receipt in your pocket. With paperless credit card transactions, this means that you don’t have to sign for all-digital transactions with your phone, either.
So the convenience promised by smartphone transactions is finally as convenient as it was promised to be.
If you’re wondering what the future of the payment industry looks like, the keyword is always going to be “streamlining.” The more steps it takes to pass money from one account to another, the more can go wrong.
Essentially we’ve spent decades trying to get back to the relative security and simplicity of just handing over a handful of bills and coins. The history of electronic transactions has been one of growing pains.
Ultimately the end result is worth it.
When you keep cash on you, a lost wallet means that’s it, you’ll never see that money again. But with electronic transactions, even with some of the security risks posed, you always have a safety net to do something about it should your wallet be lost or stolen.
So yes, it’s worth it, even if it has been inconvenient at times. But the end result is that transactions are safer, simpler, easier and more secure for customers, and the same goes for merchants.
Every transaction is traceable, trackable and verifiable, and issues like fraud and identity theft can be managed without any significant loss on the part of the wronged party.
As security protocols and practices become more efficient and effective, as transactions become safer, they will also become simpler. There will be fewer steps. We’re not far off from being able to simply walk into a store, take what we like, and walk right out via totally wireless transactions, in-store terminals communicating with the phones we carry in our pockets. The changes can be slow to come at times, but they’re inevitable.
Once the technology is there, it’s going to roll out to merchants sooner or later, and customers and sellers alike are going to be enjoying a simpler, more streamlined and safer transactions every time the point of sale is made.
The upside to these changes sometimes being slow to roll out is that we do usually have time to get used to one before the next one hits. If you’ve worked the cash register since the introduction of card chips, then you’ve certainly heard a few customer complaints, or seen them trying to swipe a card that needs to be inserted into the chip reader.
We’re always a little resistant to change, even if the change is for the better for everyone in the long run.
Likewise, if you’ve already switched over to no-signature credit card transactions, you’ve likely had to explain it to a few customers who have stood there waiting for you to hand them a receipt. Customers are creatures of habit, after all, so even when changes are for the better, they take a little getting used to.
In any event, you can’t stop the steady flow of change in any industry, and certainly not in the credit card business. The changes may take some getting used to, but they ultimately make us all safer, and they make our lives a little easier from day to day.