The End of Required Credit Card Signatures

April 17, 2018

In April, credit card signatures will become a thing of the past. American Express, Discover, Visa, and Mastercard have all announced they will end the signature requirement for in-store credit card machine purchases. For Discover, Mastercard, and American Express, the end date was April 13. Visa will end the signature requirement later in the month.

Most credit card companies ended their requirement for signatures on smaller transactions up to eight years ago. Depending on the card issuer, a signature was necessary for any transaction exceeding $25 or $50.

It’s important to understand that the credit card signature is not being completely ended. Major credit card issuers are only ending the requirement that merchants get a signature; restaurants and retail establishments can still decide whether they will use signatures.

Some major retailers like Walmart and Target have announced they will end signatures this month although other companies like Square, which offers credit card readers for small merchants, will still require signatures. Users of Apple Pay, Samsung Pay, and Google Pay will also be able to complete in-person transactions without a signature.

Each credit card company is ending its signature requirement in different ways. American Express is ending the signature requirement across the globe but Visa is only giving North American merchants the option if they have chip credit card machines. Mastercard’s decision is limited to Canada and the United States and Discover’s requirement is ending in the U.S., Canada, Mexico, and the Caribbean. Most countries outside of the United States have already switched to chip and PIN authentication and do not use signatures in transactions, however.

Better security is the primary reason for abandoning credit card signatures, which were never effective at preventing fraud, anyway. EMV chip cards have been required since 2015 and they generate a unique code with every transaction. Contactless payments like Apple Pay also use unique codes to reduce fraud. Since EMV chip cards were launched just 2 years ago, payment processing fraud has declined 66% in the United States.

The decision is a smart move that will benefit merchants and consumers with faster and cheaper in-store transactions. Consumers will save time and check-out and merchants will save the expense of storing signatures and presenting them back to issuers.

Consumers won’t see the change right away at many establishments, however, because the signature requirement is built into payment processing terminals. Merchants must take steps to actually eliminate this requirement, which may not be easy. Many retailers will also want to keep signatures, especially if they sell expensive items or their workers are paid based on tips, such as restaurant workers.

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Categories: Credit Card Processing, Credit Cards, Emerging Trends, EMV, MasterCard

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