No Signature Required: Changes to Payment Processing

In April of this year, all of the major credit providers—Visa, Master Card, American Express and Discover—did away with requiring signatures at the point of sale. Why did they require signatures in the first place, why don’t we need them now, and what does this change mean for retailers?

Back in the days of the manual credit card impression machine—what those in the retail industry fondly refer to as “knuckle busters”—the signature served as a contract. It was a commitment that the purchaser agreed to pay the credit provider the amount charged according to the guidelines of the account. Now that everything is handled electronically, use of the card itself constitutes the same agreement to pay back the credit provider.

More recently the signature was used as a means of fraud deterrent. Card owners were supposed to sign the back of the card and the cashier was supposed to compare the signature on the card to the signature on the point of sale device. But it just wasn't happening.

Signatures aren't really considered a deterrent to fraud any more. Most credit providers had already imposed a threshold for the minimum transaction size—between $25 and $50, depending on provider—that warranted a signature. Before the decision to eliminate the signature requirement entirely, the vast majority of transactions fell below that threshold.

But the real driving factor for getting rid of the signature requirement is the implementation of EMV requirements for chip cards. This, along with Payment Card Industry (PCI) regulations, has helped alleviate the credit card fraud significantly. Today we rely on more technological means of verifying identity, instead of requiring the retailer to review the signature.

The positive impact on retailers of signature-free transactions

The biggest benefit resulting from this change is an improved customer experience. More and more, customers want convenience and speed. Not having to sign means customers have one less step when checking out, so they can be on their way more quickly. Removing this manual step also increases the transaction speed for the store, which means they can get more productivity from their employees and serve more customers.

Implementing this change at the point of sale is easy. It varies depending on which POS system you’re using, of course, but it’s usually a 15-minute update to one or two settings and can be applied to the store overnight. It’s important to note, this change isn’t a requirement. Retailers can continue to require signatures if they want to, but, at the end of the day, requiring a signature has become an antiquated practice.

From a security standpoint, point of sale is undergoing never-ending changes. Payment processors are developing new methods of transferring data. Retailers are using new technologies like facial recognition and fingerprint scanning for identity verification, and it’s only a matter of time until they use them for payment authentication. We improve our knowledge every day of vulnerabilities and best practices to overcome them.

Looking for an expert in payment processing
to help you on the road to retail success?
TRUNO can help implement POS changes
and keep an eye on the road ahead.

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