Earlier this month, the need to provide a signature for credit card purchases quietly and officially went the way of the dinosaur.
As of April 14, major companies as Discover, Mastercard and Amex phased out use of signatures to verify credit card transactions at the point of sale.
What that means in practice is that most merchants throughout the U.S. and Canada can now decide on their own whether or not they require signatures for credit card purchases, but the credit card companies themselves have no such requirement anymore.
In a blog post on the topic, credit card giant Mastercard said that research showed most people felt it would be easier to pay and that checkout lines would move more quickly, if signatures were eliminated.
In a world where most cards now rely on other forms of verification anyway, such as a chip technology, biometrics and tokens, the transition away from signatures not only has many benefits for consumers, it just makes sense, according to financial and identity theft experts.
Smoother, faster payments are exactly what consumers have been demanding, says John Buzzard, industry fraud specialist at CO-OP Financial Services.
And the official elimination of signatures allows for just that, making the purchase process far more streamlined.
“The shift to no signature required has been happening for quite a long time. Self-checkout lanes are emblematic examples of the loosening of signature requirements in favor of chip technology and more secure PIN debit transactions,” said Buzzard. “We have so many options today that it almost feels as if this snuck up on us, when in reality it’s been building momentum for years.”
So Long to Writing “Check ID” on the Back of Credit Cards
In the past, many consumers wrote “Check ID” on the signature line of their credit card in order to prompt merchants to ask to see a driver’s license or some other method of identification.
This step may have prevented a few unauthorized transactions, but in reality provided very little protection against fraud, said Jim Miller, senior director, banking services, at J.D. Power.
And with signatures on the back of credit cards fading away, Miller says it will no longer be necessary to write Check ID on your card.
“In the past writing ‘Check ID’ could offer some protection against someone using a stolen credit card,” said Miller. “But many transactions now take place using a terminal and the merchant never even looks at the card so it offers minimal protection. With signatures no longer needed, even merchants will stop looking at the signatures, so they will not even see ‘Check ID written on the card.”
The Risk of Fraud Without Signature Requirements
With signature requirements eliminated for credit card purchases, the initial reaction of some consumers is that there may be a higher risk of fraud.
But in reality, the opportunity for such threats will not substantially change.
“If it was meant to be a security measure, then it was an archaic one created in a world before the internet and before the litany of security tools we have like fraud alerts and card freezes,” says J.R. Duren, a credit card analyst at HighYa.com. “If a thief steals your credit card, then how will he or she get caught? Certainly not by a cashier who notices that the signature on the card swipe is different than the one on the back of the card.”
In today’s day and age, said Duren, credit card security goes far beyond how you sign your name. For instance, encryption provided by EMV chips, has helped enhance credit card security, and there have been several other measures implemented by credit card companies and payment networks as well.
In addition, it’s important to keep in mind that it’s the credit card companies that usually absorbs any expenses tied to fraud, said Miller, of J.D. Power.
“If an unauthorized charge is made on a credit card, it is almost always the responsibility of the card issuer, not the consumer,” he stressed.
Still, for those concerned about the eliminated signature requirement, Miller suggests there are actions one can take.
The best move is to establish alerts tied to your credit card. You can create alerts whenever a charge is made, or for charges tied to a specific spending threshold – for example any charges more than $100.
If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated each month.
Image credit Ridofranz