Beginning in April 2018, major credit card issuers, including Visa, American Express, Mastercard and Discover, will no longer require signatures when making a purchase. According to Fox News, this change has been in the works since companies began issuing cards with EMV chips. CreditCards.com notes that the U.S. is behind many other countries in adopting this payment standard. The change is being made to speed up and simplify the checkout process.
Analyst Robert Barba at Bankrate.com said the use of signatures was “somewhat of a tradition.” He said “we assign a value to the signature. We think there are some sort of legitimacy to signing a receipt. The reality is it’s just not a robust form of security.”
Why is this Change Happening Now?
Forbes reports the switch from magnetic stripe credit cards to chip-embedded cards, which began in October 2015, has made the signature virtually unnecessary. When payment cards were first introduced, the signature was an additional step to verify your identity. However, retail employees rarely ever take steps to verify the signature. The magnetic stripe on the card contains data that never changes, so if a bad actor obtained a credit card number, they can make purchases on that cardholder’s account. But when a chip card is used to make a payment, the chip creates a unique transaction code that is never used in any other purchase. Chip cards seem to be successful in reducing fraud, and Visa reports that chip-enabled merchants have seen a 66 percent decline in frequency of counterfeit card fraud occurrences over the last two years, as well as a 58 percent decline in counterfeit fraud losses.
Forbes reports that the card companies are handling the change in different ways:
• Visa has made it optional for North American cardholders to sign for transactions.
• Mastercard will no longer require signatures in Canada or the United States.
• Discover will no longer require cardholders to sign in the U.S., Canada, the Caribbean or Mexico.
• American Express will completely eliminate the requirement for signatures worldwide.
With news of a data breach seemingly occurring weekly, retailers believe it is safe to process your credit card without a signature. When you swipe your card and sign for the purchase, you are agreeing to repay the microloan you just received from the card issuer. The signature itself does not guarantee transaction security. According to Visa, If your credit card details are stolen, requiring a signature will not protect you from fraud. Signing for transactions may be an old-world practice that is no longer useful in the digital world.