The Death of Credit Card Signatures
The New York Times reported today that four of the largest credit card networks, American Express, Discover, Mastercard and Visa will stop requiring signatures to complete credit card transactions.
This centuries old method of verifying a person’s identity is going the way of video tapes and CDs. Which is not surprising given that handwritten anything these days is so rare – letters, postcards, how about checks? I have a rental property and in the 10 years I’ve been a landlord, not a single tenant has ever paid by check. Everyone shows up with a wad of twenties leaving me feeling like a drug dealer. To be fair, the only time I’ve used a check myself was to provide banking information to my employer for the payroll direct deposit – another check eliminated.
In terms of authentication, a signature is pretty much useless. The article illustrates this with an anecdote about someone who has signed credit card receipts with a doodle of a dog for over ten years without it being rejected. My own experience is that I’ve never signed the back of the card as the tiny little strip is too small to contain my swoopy signature. A style I adopted so as to ensure my signature was unique and hard to forge.
Which points to the origin of the signature as a symbol of personal promise and a way to authenticate the signatory. Even banknotes contain the signature of whoever is the head of the treasury – which is a promise to pay the bearer the face of the instrument. With credit cards, the transaction receipt is also an instrument of debt secured by the cardholder’s signature. But this was never a secure means of authenticating the customer.
Recall that as credit card usage increased, merchants were obligated to phone and get an authorization for each transaction – this ensured that the card wasn’t stolen and there was sufficient credit on the card for the purchase. This later evolved to the POS machine which would automatically authorize the transaction when swiped. Today with chip and pin technology, the signature is an anachronism.
The chip on each card creates a unique code for each transaction, which when paired with the cardholder’s pin makes it difficult to duplicate. I cannot remember in the last 5-7 years having to sign for a credit card based transaction – other than when travelling in the USA.
While the need for card signatures won’t disappear immediately, several major merchants do have plans to eliminate them soon. Walmart has already stopped recording them for most transactions. Target plans to do the same this month.
Pretty soon, the only time you’ll be able to practice your signature is for large transactions like a home, birthday cards (if you still sign them) and autographs (which are under threat from selfies).