While some businesses have still not adopted chip technology, the movement toward EMV—which stands for Europay, Mastercard, Visa—is slowly but steadily underway. Since the associated liability shift in October 2015—whereby non-chip-equipped merchants can be held liable for fraudulent so-called "card present" transactions—U.S. consumers are increasingly utilizing their chip cards as a way to make in-store purchases.
There are two types of EMV cards: chip-and-pin and chip-and-signature. American consumers have primarily used the latter, which requires them to insert their card into the credit card reader and then sign their name to complete the transaction. The former is more common in other parts of the world.
However, recent credit card processing news reveals additional changes are to be made regarding chip-and-signature technology.
According to a January 2018 article by Visa, the card issuer “is making the signature requirement optional for all EMV contact or contactless chip-enabled merchants in North America, beginning April 2018.”
Dan Sanford, vice president, of consumer products at Visa, explains this decision was made to continue the company’s efforts to better “secure” payments.
“We believe making the signature requirement optional for EMV chip-enabled merchants is the responsible next step to enhance security and convenience at the point of sale,” he states.
Visa choosing to gradually do away with chip-and-signature technology shouldn’t come as much of a surprise, since other major card issuers have already begun this process.
For example, in an October 2017 announcement, Mastercard was the first to declare its intention to forgo signature requirements at checkout, highlighting that “80 percent of Mastercard in store transactions in North America today do not require a cardholder signature at checkout,” and that by the spring, the company plans to increase the percentage to 100.
While some may be apprehensive about this change, Mastercard explains it “matches all of our expectations for fast and convenient shopping experiences,” adding, that based on research the company conducted: “a majority of people believe it would be easier to pay and that checkout lines would move faster if they didn’t need to sign when making a purchase.”
Discover also stated in a press release it would not require its members to sign their names when using their credit or debit cards to make in-store purchases within the United States, as well as in Canada, Mexico and the Caribbean. This change will commence in April 2018, the same as Mastercard and Visa.
The credit card company insists other “digital authorization technologies” are more effective than signatures, including: “tokenization, multi-factor authentication, and biometrics that are more secure than requiring a signature and provide a more seamless payment transaction.”
Furthermore, American Express also announced late last year its decision to drop signature stipulations, not just in the United States, but across the globe.
Its December 2017 press release justifies the organization’s decision, pointing out that newer payment methods, including EMV technology, simply do not require such signature requirements:
“The need for signatures has declined around the world due to a number of advancements in the payments industry. These include the growth of contactless payment options, including card-based and mobile tap-and-pay methods, the global adoption of EMV chip technology, and the continued expansion of online commerce.”
Losing this feature will also improve payment “flexibility” for merchants and cardholders, as well as “speed up the process of paying in store and help reduce merchants’ operating expenses associated with retaining signatures,” according to American Express.
As you've likely noticed, this explanation falls in line with those offered by the other aforementioned card issuers, emphasizing added convenience and advanced technologies as the major benefits for merchants and consumers alike.
Learn more about the EMV liability shift and how it affects your business.