By Andrey Bobrovskiy
Have you noticed something different about your in-store transactions recently? If so, that’s likely because the end of the signature requirement announced by Visa, Mastercard, American Express and Discover is finally coming into effect. Although it affects just one step in the payment process, it means a lot more for your small business in the long run.
It Makes Checkouts More Convenient
The payment card industry has been moving toward simplicity and convenience for years. Customers want seamless and secure methods of paying for goods and services, while merchants seek reliable and flexible ways to process these payments across a variety of channels. This paved the way to innovative forms of payments, including those using near-field communication and virtual reality.
However, convenience isn’t always about adding new features. Oftentimes less is more, and this happens to be the case with credit card signatures. By now, they’ve simply outlived their usefulness, a fact supported by Mastercard’s revelation that it already didn’t require signatures for 80 percent of its transactions even before the changes went into effect.
Removing this small extra step from the transaction process will have a large impact on both sides of the checkout counter. As a merchant, you’ll get to keep the line moving, and quicker, while your customers will face less friction at an important point in their in-store experience.
Fewer steps to complete during the checkout may also mean fewer technical difficulties capable of preventing the payment from going through. This could prove to be one of the biggest advantages, especially during the busy holiday season later this year.
It Continues to Keep Payments Secure
If you’re concerned that the lack of signatures will allow more fraudulent transactions to slip through the cracks, remember that they weren’t doing much to prevent them in the first place.
In the pre-EMV era when the magnetic stripe contained all of the important payment information, matching signatures was one of the limited security features that helped confirm whether the card belonged to its rightful owner. Unfortunately, this method was poorly enforced: many cardholders failed to sign their cards in the first place, while even more merchants rarely bothered to compare the signatures at all.
Today, the logical elimination of this archaic procedure gives way to newer and more effective fraud protection brought to you by the EMV standard, a crucial element of U.S. payment processing since the liability shift that occurred in October 2015. Not only does it help protect your small business from liability for fraudulent transactions, but it also guards your cardholder data through tokenization and encryption. The former generates a unique token used in place of the actual data during the transaction, while the latter converts sensitive information into a code able to be interpreted only by those with access to the right encryption key.
It Gives Yet Another Reason to Upgrade
Although many have already waved goodbye to credit card signatures, it doesn’t mean that they’re going away completely.
First, most card brands will still require signatures outside of North America, with American Express being the only one to eliminate the requirement worldwide.
Second, the decision to do away with signatures is voluntary, so those businesses that want to preserve them, whether it’s for the sake of recordkeeping or personal preference, can indeed do so.
Finally, and this one is important, merchants who are yet to upgrade to EMV are stuck with using the old and ineffective signature method until they complete the transition.
If your small business is part of this last group and you want to make the most of modern payment processing, then you need to look into EMV as soon as possible. After all, if the ability to accept chip card transactions isn’t good enough of a reason, then reducing security risks and avoiding unnecessary responsibility for fraud and chargebacks is well-worth the one-time investment.
From EMV and PCI compliance to mobile payments and online credit card processing, the sunset of credit card signatures is a great reason to simplify your life even more by finding competitive payment processing. Discover how your small business can cut costs, improve cash flow and create more opportunities for growth.
Andrey Bobrovskiy is a Content Specialist at TransNational Payments, a provider of secure payment processing and innovative payment technology services. TransNational Payments has an A+ rating with the Better Business Bureau and is recognized as one of the Top Workplaces by the Chicago Tribune. Connect with TransNational Payments on Twitter: @goTNpayments