- Collecting receipt signatures is optional if you have an EMV-compliant credit card reader.
- EMV is more effective than receipt signatures for deterring credit card fraud. Since 2015, EMV-compliant merchants have seen counterfeit fraud drop 80%.
- Receipt signatures may still be useful for some small businesses, such as restaurants that use receipts to collect tips or service professionals that use them as proof of approval for work orders or for acceptance of completed work.
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.
In 2015, credit card companies began issuing chip cards to consumers and shifted liability for counterfeit 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 shift away from signatures, since chip cards and digital wallets have advanced antifraud technologies to authenticate transactions – such as tokenization and biometrics – that make credit card signature requirements obsolete.
Last year, the major credit card companies – American Express, Discover, Mastercard and Visa – finally stopped requiring EMV-compliant merchants to collect signatures for credit and debit card purchases. Large retailers, such as Walmart and Target applauded the decision, noting that removing this step helps them speed up the checkout process and eliminates the requirement to save receipts, and the cost of storing them safely.
The credit card networks note that the move to signature-free transactions is optional, so if you still prefer to collect signatures for credit card purchases for your business, you may continue to do so. Here's how no-signature credit card transactions work for each of the big four card networks:
- Applies to all merchants who accept American Express worldwide
- American Express says 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
- Applies to credit and debit card transactions in the U.S., Canada, Mexico and the Caribbean
- Discover says that some merchants may need to update their point-of-sale systems if they no longer wish to require customer signatures
- Applies to credit and debit transactions worldwide
- Applies to all EMV-enabled merchants in North America
- 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
Should your business stop asking customers to sign credit card receipts?
Even though large retailers quickly dropped their credit card signature requirements following the card brands' announcements, some merchants are continuing to collect customer signatures on debit and credit card transactions.
Before you decide which option makes the most sense for your business, here are a few factors you should consider.
1. Is your business EMV compliant?
If you haven't yet updated your credit card readers to EMV-compliant models, you aren't eligible to skip signature verification for Visa and Discover transactions.
Visa reports that, as of September 2018, 68% of U.S. storefronts have embraced EMV technology – but that leaves 32% that have yet to upgrade their systems. If you're still holding out, you should speak with your credit card processor about updating your card reader. In addition to enabling you to stop collecting receipt signatures, it significantly lowers your risk of experiencing counterfeit credit card fraud at the point of sale.
Despite the lack of a signature requirement for the past year, EMV technology has been highly effective against fraud. Visa reported that, as of September 2018, EMV-compliant merchants have seen counterfeit fraud drop 80% since September 2015. More than 3.1 million merchant locations now accept chip cards, and more than 511 million Visa chip cards are in circulation in the U.S. [Interested in credit card processing for your business? Check out our reviews and top picks.]
2. Does your POS system give you the option of eliminating signature authorization for credit card transactions?
If you already have an EMV-compliant credit card terminal or card reader, the next step is to check with your POS system provider to find out if the software has been updated to remove this step from the checkout process.
Many POS providers have updated their systems to allow merchants to choose whether or not they want to continue requiring customers to sign for purchases. Some, like Square, give you multiple receipt signature options. You can choose to always require receipt signatures, never require receipt signatures or only require receipt signatures for transactions over $25.
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3. Does your business use signatures for proof of approval?
If your business uses receipt signatures for other purposes, such as approving a work order, accepting completed work or agreeing to a sales policy (such as "all sales are final"), you may need to keep collecting receipt signatures.
Writing for 360 Payments, Lisa Coyle says, "Even if you decide that you are ready to do away with them on your EMV credit card receipts, you may find value in adding a signature requirement to your contract or work order. Signatures are good for much more than authorizing a credit card transaction."
Restaurants are also likely to continue requiring receipt signatures to encourage tipping. If, for instance, your business is a sit-down restaurant that doesn't have a pay-at-the-table option that allows patrons to add the tip before using a credit card to pay the bill, it probably doesn't make sense to forgo receipt signatures. It's less awkward to continue asking customers to sign paper receipts that have tip prompts than asking them the tip amount they want added to their bill before you charge their credit cards.
4. Are you nervous about chargebacks or credit card fraud?
Some merchants that have chip card readers in place and continue to request signatures have security concerns about forgoing signature verification. These concerns aren't new. When the major credit card networks announced EMV compliance requirements (the October 2015 liability shift), critics worried that the chip-and-sign process was less secure than the chip-and-PIN process used in Europe.
"Card networks should have adopted the global standard PIN requirement as part of the U.S. EMV rollout," said Monica Eaton-Cardone, COO of Chargebacks911. "With no signature or PIN required, it's easier for fraudsters to use lost or stolen cards at point-of-sale terminals and harder for retailers to defend against card-present chargebacks."
The reason that credit card networks decided not to have a PIN requirement was because they predicted that it would cause too much friction at checkout. They'd witnessed the slow adoption of contactless payments like Apple Pay and Google Pay, and saw how reluctant Americans are to adopt new payment technology and processes – even when they're improvements.
Consider the irritation that consumers and merchants expressed when chip card transactions took a few more seconds to complete than swipe transactions. Then imagine the frustration of shoppers who haven't ever used a PIN for credit card transactions – especially those who then forget their new PIN (and the exasperation of the shoppers waiting in line behind them and the cashier who's been helping customers learn the new process all day long for weeks).
Mastercard – which has one the most lenient no-signature policies – says that before the no-signature requirement went into effect, more than 80% of in-store Mastercard transactions didn't require a signature; furthermore, removing the signature requirement hasn't negatively impacted 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. Likewise, the other card networks also have advanced fraud-protection measures in place.
Should you sign your credit cards?
Now that receipt signatures are no longer required, you and your customers might be wondering what to do about that signature panel on the back of credit cards. Should it be signed? For now, yes, as most of the card networks still require cardholder credit card signatures and note that the cards aren't valid without them.
The exception to this rule is Mastercard. In October 2018, Mastercard announced that it no longer requires the cardholder to sign the signature panel on the back of the card. Further, as of April 2019, card issuers worldwide are no longer required to include a signature panel on Mastercard credit and debit cards.
What about the magnetic stripe? Eventually, credit cards may be issued without it, but that isn't likely to be anytime soon.