For as far back as we can remember, signing for a credit card purchase was simply part of the purchasing process. Customers signed the credit card receipt, the employee or business owner would check the back of the card to ensure the signatures match and the sale was completed. Ok, so nobody really checked the back of the card to match up signatures. However, signing the credit card receipt helped reduce the risk to banks that purchases would be disputed. As a result, the cost of processing an in-person transaction, with a signed receipt, was lower than transactions with no signature or those taken over the phone or online.
That all changed beginning this past April with Visa joining MasterCard, Discover and American Express in no longer requiring signatures on credit card transactions. So, what changed? Very simply, the digital evolution of payments and payment security. It is important to note that the Card Brands have their own rules as it pertains to no signature, as shown below.
Merchants in the U.S. and Canada can forego cardholder signatures for in-store credit and debit purchases, effective on April 13, 2018.
The signature requirement is optional for all EMV contact or contactless chip-enabled merchants in North America, beginning April 2018
No longer requires signatures at the point of sale for credit and debit transactions in the United States and other countries beginning April 2018
No longer requires signatures at the point of sale for all purchases beginning April 2018
The goal of not requiring a signature at checkout is to speed customers through checkout lines and give merchants greater control over their customer experience. It is becoming increasingly more apparent in our digital, fast-paced marketplace, where consumers appreciate any opportunity to save time.
The Card Brands came to realize that getting a customer’s signature on a credit card transaction was a pain point for business owners and created inefficiencies at check-out. For certain businesses speed of checkout is paramount and needing to get a signature simply slows down the process. The challenge was in how to get rid of the signature while at the same time maintain the same level of security to protect transactions and customer data.
The emergence of EMV (Chip), contactless payment options, tokenization, biometrics and specialized digital platforms that use newer and more secure methods to prove identity are providing enhanced security that is needed to protect transactions and customer data. Data about point-of-sale fraud points to a 60% to 70% reduction in fraud since chip cards were introduced.
At first glance, this might sound like a radical proclamation, especially to people who have had credit and debit cards for decades. However, the change matches expectations for a fast and convenient shopping experience. Furthermore, most Americans may not notice a switch largely due to low-ticket purchases currently not needing a signature.
The No-signature Affect
The impetus for the change is routed in the card companies’ expectation that no signature will speed up the checkout experience as customers won’t have to wait to sign to complete a transaction. With that said, there are some questions about how restaurants might alter how they close out tickets, since diners typically write the tip amount when they sign the receipt.
There are a few options as it relates to restaurants. The first option would be to follow Europe’s practice, where waiters bring a portable reader to the table so diners can insert their card, input the tip, and close the transaction all at once. A second option will be to include an automatic tip in the bill. A third option is to stick to the same process as before to eliminate any confusion. Restaurants that don’t take chip cards, and instead rely on swiping, will continue to ask for signatures.
It should be noted that Millennials are now the biggest generation in the country, surpassing Baby Boomers by 1.5 million. Apart from the vast size of this group, Millennials have adopted digital technology to make their lives easier and they are the heaviest users of smartphones, which use contactless payments. Furthermore, Millennials are not big fans of writing in script.
Please keep in mind, the no-signature requirement change is optional to business owners. There may be instances where merchants would like to continue to require capturing the signature of their customers. For example, a business may have a return policy that requires customers to have a signed receipt. Or, if a business is not currently accepting EMV cards, it would be a good idea to continue to grab customer signatures, especially for Visa.
About Clarity EPS
Clarity EPS is a leading provider of payment processing and technology solutions, working with businesses of all sizes helping them process payments in a more efficient, secure and affordable manner. We assist businesses in eliminating the guesswork regarding payment processing and provide clear, concise and understandable solutions. Our core values are rooted in honesty, fairness and transparency.
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