In many parts of the world, credit card purchases have moved to using a “Chip and PIN” model, where customers uses the Chip on their credit card with a pre-set PIN to essentially achieve a two-factor identification. Theoretically, someone who steals your credit card won’t be able to use it, since they won’t know your PIN. Meanwhile, here in the US, using signatures for fraud protection is still the norm. However, that is quickly changing.
Just last week, Discover announced that they will be eliminating signatures on credit card purchases. The company joined MasterCard, which has also announced that they are doing away with signatures back in October of this year. Today, American Express is announcing that they, too, will no longer require signatures on credit card purchases. However, unlike Discover and MasterCard, American Express is eliminating this requirement globally, instead of just in the US. Currently, AMEX does not require a signature on purchases less than $50 in the US, but that limit will essentially go away come April 2018.
In a press release, American Express says:
The payments landscape has evolved to the point where we can now eliminate this pain point for our merchants. Our fraud capabilities have advanced so that signatures are no longer necessary to fight fraud. In addition, the majority of American Express transactions oday already do not require a signature at the point of sale as a result of previous policy changes we made to help our merchants.
It’s pretty obvious why credit card networks are trying to mirror each other in policies like these; the easier it is for someone to use a card, the “higher in the wallet” the card will go. By eliminating a signature requirement, customers (…ahem who might not otherwise be referencing a spreadsheet of which card will earn them a category bonus) are more likely to reach for the card. And I think we’d all be lying to ourselves if we believe the signature is doing anything to prevent fraud―they are rarely verified by sales associates, and even if it is verification can be difficult. And with the rise of mobile payments made with biometric verifications, signatures are essentially obsolete with many purchases.
All three payment networks will implement these changes in April 2018. With this new announcement, VISA is the only one left of the big four credit card networks in the US that will still require a signature on larger purchases.