Have you ever grown weary of the awkward back-and-forth exchanges that occur every time you have to sign for your morning coffee, clothing haul, or dinner date? Good news for you: the four major credit card brands are no longer requiring merchants to collect cardholder signatures for most transaction receipts. Although the change promises a seamless checkout experience for customers and an elimination of signature storage costs for merchants, its long-term implications are even greater. Follow along as we discuss how no more cardholder signatures signifies a cultural shift in where we are placing our trust: towards digital security measures such as EMV technology and digital tokenization, and away from manual, cardholder-dependent methods.
Better late than never
Over time, signatures have become a symbolic vestige for the payments industry. As credit card companies and retailers attempt to align with the times and consumer expectations, signature requirements have slowly been phased out around the world. For North America, MasterCard was the first to announce its transition last October, citing research demonstrating how “nearly one in five Americans (17%) don’t remember the last time they used their signature outside of a sales receipt” and “almost three-quarters (72%) of customers surveyed said they get annoyed when the person in front of them in a store line takes a long time to check out”.
The end of an era
When the news arrived, you can only imagine that the average American consumer didn’t even flinch. After being delayed or dismayed by the cumbersome process, and then learning that the process held little-to-no value in terms of their payment security, they were eager for change.
For the most part, merchants were happy as well, expecting faster transaction velocity and better experiences for their customers. However, the total impact on merchants in regards to chargeback policies has yet to be measured, as signatures are still listed as reason codes for compelling evidence in regards to disputes and fulfillment requests.
All things considered, removing the need for a signature will increase the speed and convenience of checkout, decrease merchants costs associated with safely storing signatures, encourage EMV migration, and pave the way for more digitally-based authentication methods.
A sign of the times
At the surface, the removal of cardholder signatures may seem inconsequential, but when analyzed closely, its implications ladder up to profound meaning. As Jaromir Divilek, EVP of Global Network Business for AmEx describes it: “the payments landscape has evolved to the point where we can now eliminate this pain point for our merchants” because “our fraud capabilities have advanced so that signatures are no longer necessary to fight fraud.”
As we continue to evaluate how to improve payments as a whole, a slew of questions come to mind:
What systems will we do away with next?
What transformations will take their place?
Will we begin to sacrifice security for convenience?
(Do I no longer have to teach my kids cursive?)
The answer is hidden in plain sight. Search for insight within the ever-evolving culture of the American consumer, whether it be preferred payment methods, value systems, or expectations. If there’s one moral from the saga of cardholder signatures, it’s that the future foundation of the payments ecosystem will be built on the desires of the buyer.
Where do we go from here?
Excited about upcoming transformations in payments, yet overwhelmed by how to manage them? Learn how Arrow Payments can help you navigate the process of building payments at your institution by clicking below: