Signatures have been required for credit card purchases since credit cards first became a major thing back in the 1950s, but they’re about to become a relic of the past. That’s because the major credit card brands—Visa, Mastercard, Discover, and American Express—decided that signatures have become obsolete as a security measure. So what does this mean for merchants?
The quick answer is that it’s now optional whether you want to collect signatures or not at the point of sale. The more in-depth answer is that it varies from one credit card brand to the next. For example, Visa still requires signatures from merchants with payment systems that do not read chip cards.
New Signature Policy for the
|Signature optional in the United States, Canada, Mexico, and the Caribbean for retailers with chip card payment terminals|
|No signature required in the United States and Canada|
|No signature required in the United States, Canada, Mexico, and the Caribbean|
|No signature required for any of its cards worldwide|
To understand the changes, it helps to understand why credit card companies required signatures in the first place.
Credit card companies typically cover the costs of fraudulent charges, so they have a vested interest in reducing fraud. Requiring signatures was the old school way of doing that, where fraud investigators literally compared the signature on receipts against the cardholder’s real signature to determine whether the cardholder was present or not to make a purchase.
When the internet happened and online shopping got popular, requiring signatures simply wasn’t possible. That left credit card companies scrambling to figure out new ways to ensure the safety of credit card data and prevent fraud. The end result was better technology and security measures, namely chip technology, that make the signature obsolete.
Credit card companies were punishing merchants with higher rates to force them to adopt new credit card terminals with chip technology.
Starting in 2010, credit card companies stopped requiring signatures for smaller transactions (less than $25 or $50 depending on the card), but they didn’t ditch signatures altogether. That’s because they needed merchants—small and medium businesses, in particular—to start using payment terminals with chip card readers. This explains why you might have been punished with higher processing rates if you had old credit card swiping terminals that couldn’t read chips: credit card companies were pushing hard for the new tech to be widely adopted.
That time has finally come, and as of April, requiring signatures is optional for all credit card purchases, as long as you have a payment terminal with chip card technology. The credit card companies predict that 75% of merchants will have quit requiring signatures by the end of the year, mostly because it speeds up the checkout process when you don’t need customer signatures.
It is an optional change, so you have a choice as to whether you want to require it or not. There’s no reason to continue asking for signatures, however, unless you’re just sentimental about signatures.
Contact SpotOn if you need help determining your signature options.
SpotOn recommends merchants quit requiring signatures for several reasons:
- It speeds up the checkout process
- New technologies are more secure than requiring a signatures
- It gives you more control over your customer experience
We should also note that our selection of payment hardware accepts chip cards, as well as contactless payment types, and are PCI compliant. Also, if you’re a merchant partnered with SpotOn, we’re here to help. Contact us any time to discuss your signature options and what will work best for your company.