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Grow Your Business Technology

Digital Killed the Receipt Signature: Credit Card Transactions Just Got Easier

Digital Killed the Receipt Signature: Credit Card Transactions Just Got Easier
Credit: Jacob Lund/Shutterstock

For decades, credit card companies relied on receipt signatures to prevent fraud. They required merchants to collect and store customer signatures so that if a transaction was disputed, the merchant could produce a signed receipt proving the customer was physically in the store and personally approved the purchase. Without this proof, merchants were on the hook for losses due to chargebacks. They were also liable if the signature on the receipt didn't match the signature on file or on the card.

Three years ago, credit card companies began issuing chip cards to consumers and shifted liability for fraud occurring at the point of sale to merchants who hadn't yet updated their processing hardware to include EMV compliant card readers. This laid the groundwork to make the shift away from signatures, and since then, chip cards and digital wallets have advanced antifraud technologies to authenticate transactions, such as tokenization and biometrics, making signature requirements obsolete.

Starting this month, the four major credit card brands – American Express, Discover, Mastercard and Visa – are no longer requiring their merchants to collect signatures on debit and credit card transactions. This change will speed up and simplify the checkout experience, benefiting both merchants and consumers. It also eliminates the requirement to save receipts, and the cost of storing them safely.

There are some caveats to removing the signature requirement. For example, Visa notes that this change only applies to EMV-enabled merchants, and Discover says merchants may need to upgrade their POS system to participate in this program. Although not explicitly stated, it implies that if your card reader isn't EMV-compliant, you may be required to replace it.

Also, depending on whether your processor updates its software, your POS system may continue to ask for signatures as part of the checkout process. This change is optional; if you prefer to continue asking your customers for their signatures, you may do so.

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If you're concerned that the lack of signature proof opens your business up to fraud and more chargebacks, don't be – just make sure you're EMV compliant. Visa reported that in September 2017, EMV-compliant merchants saw counterfeit fraud drop 70 percent since December 2015. More than 2.7 million merchant locations now accept chip cards, and more than 481 million Visa chip cards are in circulation in the U.S.

Mastercard notes that before the no signature requirement went into effect, more than 80 percent of in-store Mastercard transactions didn't require a signature, and asserts that removing the signature requirement won't impact security because of its antifraud technology. It has multiple security layers in place, including an Early Detection System that prevents attacks by proactively alerting issuers when cards and accounts have been exposed to security incidents and data breaches.

Below is a summary of how each credit card network is rolling out no-signature transactions, noting merchant location and any caveats to this new policy.

American Express

  • Applies to all merchants who accept American Express, worldwide
  • Effective: April 2018
  • American Express notes that in some jurisdictions, merchants may be legally required to continue collecting signatures. It also states that the program is optional, and merchants who wish to continue collecting signatures may do so.

Discover

  • Applies to credit and debit transactions in the U.S., Canada, Mexico and the Caribbean
  • Effective: April 2018
  • Discover says that some merchants may need to update their point of sale systems if they wish to no longer require customer signatures.

Mastercard

  • Applies to credit and debit transactions in the U.S. and Canada
  • Effective: April 13, 2018

Visa

  • Applies to all EMV-enabled merchants in North America
  • Effective: April 2018
  • Visa says the signature requirement is optional for EMV-enabled merchants. If you haven't yet upgraded your system to accept chip cards, you'll need to continue requiring signatures.

If you're looking to upgrade your POS system, visit our best picks page to view our recommendations and reviews.

Lori Fairbanks

Lori Fairbanks has years of experience writing and editing for both print and online publications. After graduating from Brigham Young University with a Bachelor of Arts in English, she worked as an editor for Creating Keepsakes magazine and then as a freelance writer and editor for a variety of companies, including marketing firms and a medical university. She joined Purch in 2014 as a senior writer for Top Ten Reviews and now writes for Business.com and Business News Daily.

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