Quick, easy, contactless — no longer the gold standard, but the expectation in payment processing.
On May 14, 2020 Visa updated its policy to give all businesses the option not to require a signature from customers paying in-person. However, this update is more of a finishing touch in the history of face-to-face transaction policy. As of 2018, the major credit cards — Visa, Mastercard, Discover, and American Express — did not require a cardholder’s signature in most instances.
We sat down with Karen Markey, Nelnet Payment Services operations and compliance director, to recap what this tweak in policy means for people’s day-to-day.
What’s the policy change?
Visa, Discover, and Amex no longer require cardholder signatures on any device across the globe. Previously, Visa required merchants to get in-person cardholder signatures if their business didn’t have an EMV capable device (the ability to authentic chip-card transactions). Mastercard no longer requires cardholder signatures for merchants located in the U.S., U.S. Territories, Canada, Latin America/Caribbean and Asia Pacific regions. What does this mean for consumers?
“No signature means a truly contactless experience,” Markey said. “You can now insert or tap your card and move on with your day.”
This move is a welcome update in the era of COVID-19. Contactless transactions lessen the number of surfaces you interact with. So you can check out at the grocery store or grab some local takeout with additional peace of mind.
What does this mean for merchants?
The change only applies to merchants conducting person-to-person transactions.
“This takes the payment processing industry to another level of automation,” said Markey. “For merchants who choose to waive getting a signature, I think customers will appreciate being able to process in a faster, contactless environment.”
It also means merchants won’t be held liable for chargebacks solely because they didn’t collect signatures.
Markey recounted a story from her professional career where a signature policy loophole and a scheming customer stuck a restaurant with the chargeback bill. A customer dined, asked for the bill, used their card to pay, and purposely didn’t sign the receipt. Then the customer appealed the transaction. Even though it wasn’t fraud — the customer paid with their own card — the restaurant lost because they didn’t collect a signature as hard proof the customer really ate there.
Thankfully, that loophole is no longer something merchants have to worry about.
Are transactions any less secure?
No. In fact, the opposite is true. Credit cards dropped the signature requirement because payment processing security outgrew the need for it.
In 2017 Jaromir Divilek, American Express executive vice president of global network business, said “Our fraud capabilities have advanced so that signatures are no longer necessary.”
The same holds true today. Computer chips embedded in cards are more reliable for preventing fraud than a barely legible signature on your receipt.
Most people will likely not notice any change at all. Speed and convenience have simply evolved to be integral parts of the payment processing experience. Signatures have not.
