Discover has announced that as of April 2018 they will no longer require signatures at the point of sale for credit and debit transactions in the United States, Canada, Mexico, and the Caribbean. The goal here is to speed up the amount of time that it takes to complete a purchase. The logic is that if consumers know that a certain type of payment processor will be faster, they may be more likely to use that card.
Discover isn’t the only payment processor to make such an announcement. Several weeks ago Mastercard announced that they will be eliminating signature requirements as of April 2018 as well, so clearly Discover’s move is a competitive response.
These moves on the part of Discover and Mastercard do nothing to enhance security, though they don’t do much to reduce security either. The whole concept of requiring signatures seems so outdated, given that they’re not actually verified at the time a purchase is made. If you’ve ever dealt with credit card fraud, you’re not even asked to look at receipts and confirm if a signature is from you. So it’s an outdated concept that really is just a security theatre of sorts.
What continues to surprise me is the lack of credit card security we have in the US. Outside the US, chip & PIN technology is the norm, which actually adds an extra layer of security. Not only does it require entering a PIN code, but it also means that the transaction always happens within sight of the cardmember, rather than elsewhere, where they often disappear with your card. Meanwhile in the US a vast majority of cards don’t have that technology.
The good news is that as consumers it’s not really our problem — this just means that credit card companies are spending a lot more money on fraudulent purchases in the US than elsewhere, and it seems they’d rather do that than overhaul the system.
Now that two payment processors are adopting this technology, I’ll be curious to see if American Express and Visa follow as well.