Signature Requirement Changes

A major development is taking place in regards to credit card transactions. This year will see all major credit card brands (Discover, American Express, MasterCard, and Visa) do away with the signature requirement for chip cards that use EMV authentication technology and contactless chip cards. Older credit cards that do not have EMV chips, however, will still require signatures for the transaction to be authenticated.

MasterCard was the first to announce that it would be making signatures optional effective April 13. In a news release earlier this month, they stated that merchants in the United States and Canada would no longer have to require cardholder signatures for in-store and debit purchases. According to MasterCard, over 80% of point-of-sale purchases that it processes will no longer need a signature.

Discover followed suit and announced that beginning April 2018, signatures would not be required for credit and debit transactions at the point-of-sale on the Discover Global Network in the United States, Canada, Mexico, and the Caribbean. In its press release, Discover’s Vice President of Global Products Innovation states:

“As the payments industry continues to evolve and introduce new methods of transacting, we’re making sure that Discover is providing customers and merchants with a smooth and more secure payments experience. With the rise in new payment security capabilities, like chip technology and tokenization, the time is right to remove this step from the checkout experience.”

American Express will also be eliminating the signatures requirement as of April 2018. This move will apply across the globe for all merchants who accept American Express. According to Jaromir Divilek, Executive Vice President of Global Network Business:

“The payments landscape has evolved to the point where we can now eliminate this pain point for our merchants. Our fraud capabilities have advanced so that signatures are no longer necessary to fight fraud. In addition, the majority of American Express transactions today already do not require a signature at the point of sale as a result of previous policy changes we made to help our merchants.”

Visa stated via its blog that it would make the signature requirement optional for all EMV contact or contactless chip-enabled merchants in North America, beginning April 2018. Said Dan Sanford, Vice President of Consumer Products:

“Visa is committed to delivering secure, fast and convenient payments at the point of sale. Our focus is on continually evolving the market towards dynamic authentication methods such as EMV chip, as well as investing in emerging capabilities that leverage advanced analytics and biometrics. We believe making the signature requirement optional for EMV chip-enabled merchants is the responsible next step to enhance security and convenience at the point of sale.”

Benefits of the Change

The card companies have stated multiple benefits resulting from the move away from signature requirements.

  • Enhanced customer experience at the point of sale. Checkout times will be accelerated and card transactions will be more efficient. Customers can hopefully expect more convenience and shorter check-out lines. They should also receive a more simplified and consistent payment experience.
  • Operating expenses associated with storing and presenting signatures will be reduced; these cost savings can then be passed on to customers.
  • Security will not be adversely affected. Industry experts believe that signatures are no longer necessary for the security of transactions or to reduce fraud. Existing chip technologies and other newer measures are more than capable of verifying cardholders’ identity. Additional digital authentication technologies include tokenization, multi-factor authentication, and biometrics. Consumers and merchants can be assured that card security will not be placed in jeopardy by the shift away from signatures.

Keep in mind that the elimination of the signature requirement only applies to those merchants who support EMV technology. Merchants who are not currently supporting EMV should consider upgrading their payment processing solution with EMV compatible devices and terminals to take advantage of this opportunity to improve their customer experience and reduce the costs and effort associated with signature requirements.