The Death of Signatures

Sydney VaccaroIndustry Trends2 Comments

Death of Signatures

American Express announced that merchants are no longer required to get the cardholder’s signatures on all transactions starting in April 2018. The change in the checkout process applies to merchants worldwide. In the American Express press release they provide the reasoning behind the change. By not requiring merchants to collect the card holder’s signature it will a more consistent and simplified checkout process, speed up the in-store checkout process, and reduce merchants operating cost of collecting the signatures.

Why Now?

Jaromir Divilek the Executive Vice President of American Express said “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.”

With the introduction of the EMV chip readers and the liability shift that took place in 2015 merchants have had the incentive to switch all there POS systems to be EMV capable. The everyday payment capabilities have gone beyond just EMV to contactless payment options. On top of the advancements in payment technology there has been a boom card-not-present transactions (aka ecommerce). When a customer makes an ecommerce purchase it is impossible for merchants to get a signature. Yet finished with 2.3 trillion dollars worth of ecommerce sales. Not one of those transactions required a signature so why should in-store purchase require it either.

Amex Isn’t the First

This decision by American Express to cut the signature requirement is not a revolutionary idea. It actually follows an earlier decision to stop requiring signatures on purchases under $50 in the United States, under $100 CAD in Canada, and under £30 in the U.K. American Express is not the first card network to eliminate the signature. American Express is actually just following Discover and MasterCard. Discover previously announced that in April of 2018 they will no longer require signatures on any transactions in the United States, Canada, Mexico and the Caribbean. MasterCard will be implementing the no signature requirement on all purchases in the United State and Canada starting in April of 2018. These policies are much more limited compared to American Express that is expanding their no signature policy practically worldwide.

The decision behind the no signature requirement is practically the same between the card networks. In Discover’s press release their Vice President of Global Products Innovation, Jasma Ghai said “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.”

Visa is the last to announce the end of signatures. They will be making the signature requirement optional for all EMV contact or contactless chip-enabled merchants in North America, beginning April 2018. April will be a big month for card network changes because Visa will also be implementing its new global dispute resolution process: Visa Claims Resolution (VCR). This affects how the process that disputes are handled by Visa. Find out what to expect and how VCR will affect your business.

What Does It Mean For Payments and Chargebacks

As the executives of Discover and American Express stated the way that cardholders are paying is becoming more secure. The new and innovative technology is the reason behind that security. Technology such as tokenization, multi-factor authentication, contactless payment options, and biometrics all have been created to make purchases faster, more convenient, and secure. Removing the requirement of signatures on purchases is a step into the future of payments.

There are many reason codes that a signature from the cardholder can be used as compelling evidence in a chargeback response. Because these card networks no longer require signatures they will most likely remove the signature as part of compelling evidence that can be presented. Merchants could continue to require their customers to sign for purchases if they will like to. Until there is a law requiring them to do otherwise merchants would have the choice to get a signature or not. If the card networks no longer require the signature for compelling evidence there is even less incentive for merchants obtain one.

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