‘Speed matters’: Mastercard nixes the signature
- As of April 2018, Mastercard is no longer requiring a signature for transactions over $50.
- The signature is seen as a useless extra step when biometrics and tokenization are far better ways to authenticate a customer.
In long checkout lines, seconds count.
The introduction of chip cards in the U.S., while praised for added security, added seven or eight seconds to each person’s checkout process, especially if the customer had to sign before finalizing the purchase. But Mastercard announced Thursday that it’s no longer going to require retailers to ask for a signature. It’s a nod to the growth of technologies that can authenticate a customer more securely, and an attempt to take friction out of the retail experience.
“Speed matters,” said Linda Kirkpatrick, evp of market development at Mastercard. “Merchants want to grow market share, they want to get customers in the store and immerse them in a unique experience, and they don’t want them to spend time at the point of sale.”
Kirkpatrick said the decision to eliminate the signature was the result of the evolution of digital payment methods, tokenization and biometrics. The rule, which takes effect in April of next year, applies to the U.S. and Canada. Currently, transactions valued over $50 require a signature.
Industry analysts saw the move as a step in the right direction when technology has advanced to the point where signatures are meaningless.
“There’s the aspect of it being good for customer service and customer experience at the point of sale,” said Simon Laker, vp of consulting at Consult Hyperion. “As a customer authentication method, a signature is pretty poor in a day where we’re using Apple Pay, Android Pay and biometrics; there are better ways of authenticating customers.”
Laker added that as a fraud prevention mechanism, signatures are also weak since they’re rarely verified. But Mastercard said retailers will still have the choice to require customers to sign. And in the U.S., it’s also up to the issuing bank to require a PIN along with the chip. So unlike the U.K. and Canada, where PINs were required by banks after the transition from magnetic stripe to chip cards, PIN numbers are only at partial implementation in the U.S.
Getting rid of credit card signatures seems long overdue in the U.S., especially given the pervasiveness of mobile payments elsewhere in the world, notably in Asian markets. It’s a lag industry watchers have complained about for years — and it’s emblematic of the West’s slow adoption of payment technologies.
“Experts in the field make fun of signatures,” said David True, partner at PayGility Advisors. “When was the last time someone checked your signature when you signed? Nothing is done with it.”
To U.K.-based analyst Dominic Hirsch, the removal of the signature without a swift transition to chip and PIN seems puzzling.
“They’re waiving the requirement for a signature without mandating an alternative; that is very unusual,” said Hirsch, managing director of banking and payments consulting firm RBR. “In Europe, when they got rid of the signature, it was immediately replaced by the chip and PIN — it’s evidence that the U.S. is still a long way from implementation of chip and PIN.”
For large U.S. retailers, however, it could amount to a cost saving. “Removing this step at the checkout will save time for our customers and decrease the expense associated with storing and presenting signatures back to the issuer, all while preserving security for customers,” said a Walmart spokesperson, in an emailed statement.
Not requiring a signature at checkout for Mastercard customers while requiring one from customers that hold other cards could create a cumbersome experience for retailers, which leads to speculation as to whether other credit card companies will do the same. But Visa contends that due to the adoption of biometrics and other authentication technologies, most Visa transactions don’t require a signature. A Visa spokesman said more than 75 percent of Visa card transactions in North America do not require a signature.