You know the drill – you walk into a store, choose some items to purchase, and swipe your credit card to pay for them. The transaction processes, and you are prompted for your signature, either by the cashier or by the terminal itself. You scrawl some scribbles that look more like a toddler’s drawing than a signature, and you’re all set. What if we told you those signatures don’t really matter? In fact, the major credit card companies in the United States have all started to phase them out! Let’s take a look at what prompted this decision and what it means for you.
Why Do We Have Signatures in the First Place?
The original idea behind the signature requirement was that while swiping your credit card initiated the transaction, you hadn’t really authorized it until you signed the receipt. The idea was that by forcing the customer to actually sign for their purchase, fraud could be thwarted and chargebacks avoided. In reality, it is extremely hard to tell whether or not a signature is legitimate. Businesses certainly don’t keep a handwriting expert on staff to review each and every signature, and honestly neither do banks or credit card companies. Even if a fraudulent transaction were to take place, how on earth would a receipt signature be used to verify the transaction? Businesses would have to keep receipts secured in a database, which is a major pain in the neck, even if they stored them electronically. Then they’d have to send the receipt to the card company – ugh, what a hassle. Plus, when was the last time you signed one of those electronic signature pads and it actually looked like your signature? You get our point.
Why Get Rid of Them, Though?
OK, so signing for a credit card transaction doesn’t do a whole lot of good. But if it does no harm, why shouldn’t we just keep doing it? Well, it actually does do at least a little bit of harm. Every time a customer has to sign for their purchase, they waste about 30 seconds going through prompts, signing the document, and fumbling with receipts. This sounds extremely minor, but in a busy store with lots of customers waiting in line, the more sales a cashier can process per hour, the better. Even credit card companies think this is a great idea. More transactions mean more fees collected from businesses and more chances for consumers to rack up debt – for which the card companies also charge them!
What’s Taking Its Place?
As we wave goodbye to the signature, we’d like to introduce you to what’s going to take its place – and do a much better job, we might add. You actually already know about part of the replacement – EMV chip card processing. The embedded chip your credit cards started coming with over the past few years is far more secure than the old mag strips on cards of old. It’s virtually impossible to duplicate a chip card, and a signature wouldn’t add any additional security on top of it. Even more important, though, is the adoption of Chip-and-PIN credit cards. While this type of card is still catching on in the United States, its widespread use in other countries has resulted in significant security advancements. Chip-and-PIN involves inserting the chip card into the reader and then entering a PIN that only the customer knows. Signatures can’t hold a candle to these kinds of precautions.
Security Should Be Your Number One Priority
Whether you’re a business owner or a consumer, there’s no substitute for vigilance and pragmatism. For business owners, who handle many, many transactions a day, making sure you’re protecting your customers’ data is paramount. You need a credit card processor who gets it – like 360 Payments. Give us a call or drop us a line on our website. We’d love to show you how we’re different from the “other guys.”
PS – Did your business end up on the MATCH List? Here’s why, and how to fix it.
PPS – Make sure you ask your new credit card processor these three questions before you sign on the dotted line.