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Wednesday, April 11, 2018

Goodbye to signatures at POS

Signing for credit card purchases at the POS may soon become a thing of the past. In separate announcements over the last six months, American Express, Discover, Visa and Mastercard all said they're scrapping requirements that merchants obtain cardholder signatures for in-store credit and debit card purchases effective this month.

Card brand representatives said the option to forego signatures is available to all merchants, regardless of terminal status. "Discover's policy will apply to all card-present transactions. This includes EMV, magnetic stripe, contactless, mobile, etc." a Discover spokesman said. "Mastercard is retiring the need to collect cardholder signatures for all U.S. and Canada-based merchants, effective April 13," said a Mastercard spokeswoman. "The Mastercard rule makes no technical requirements," she added.

At least one industry expert, however, suggested many merchants, particularly businesses that have yet to install POS terminals capable of reading EMV chips, may not want to forego signature authentication of customers who pay with cards. "If they're not collecting signatures, how do they know it's the cardholder they're dealing with?" asked consultant Paul Martaus.

Signature seen as old school

In an April 5, 2018, statement heralding the retirement signature requirements, Mastercard stated it's up to merchants to decide when to implement the change. But the company emphasized that American consumers are ready to say goodbye to signature requirements for card purchases. Nearly one in five (17 percent) surveyed in March said they couldn't remember the last time they had to sign something outside of a sales receipt. Almost three quarters (72 percent) said they get annoyed when someone ahead of them at a checkout takes a long time completing their transaction.

"Our consumer research found that 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 purchases," Mastercard said in an autumn 2017 blog post explaining the planned move. "The move will help merchants speed customers through checkout, provide more consistent experiences for every customer with every purchase and should decrease costs associated with safely storing signatures," Mastercard stated.

Executives at AmEx, Discover and Visa offered similar assessments. In a December 2017 statement, AmEx said 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." The company added that it now uses advanced machine learning algorithms that help it to better detect fraud without inconveniencing customers.

"The payments landscape has evolved to the point where we can now eliminate this pain point for our merchants," said Jaromir Divilek, executive vice president for global network business at AmEx.

Jasma Ghai, vice president of global products innovation at Discover, said, "With the rise in new payment security capabilities, like chip technology and tokenization, the time is right to remove this step from the checkout experience."

Dan Sanford, vice president, consumer products at Visa, stated, "Our focus is on continually evolving the market towards dynamic authentication methods such as EMV chip, as well as investing in emerging capabilities that leverage advanced analytics and biometrics. 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."

About a third of U.S. merchants EMV compliant

Brick-and-mortar merchants have been under the gun since 2015 to install POS devices that can read the EMV chips in customers' credit and debit cards. That's when rules took effect that shifted to merchants all liability for counterfeit and lost or stolen card fraud involving transactions that were not authenticated using chip-reading (EMV-compliant terminals). Gas stations with unattended card readers have until 2020 to upgrade those devices to support EMV authentication.

Auriemma Consulting Group reported last fall that EMV is becoming widespread, and seems to be doing its job. "Counterfeit fraud claims have declined for five consecutive quarters and are down 34 percent from their peak in early 2016," the firm stated.

However, data published by EMVCo, which manages and enforces EMV specifications and related technical dictates, suggests merchant uptake of EMV is far from universal. As of December 2017, 59 percent of card-present transactions globally were authenticated using EMV chips and card readers, up from 42 percent a year earlier. The largest growth curve was among U.S. merchants, but even here just 31.4 percent of transactions were EMV-enabled compared to December 2016, according to EMVCo. end of article

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