The swipe-and-sign credit card ritual has been a staple of retail shopping for decades. In fact, it’s as American as apple pie.
- Swiping your plastic initiates the transaction.
- Signing the receipt authorizes the transaction.
Yet retailers don’t employ teams of handwriting experts to verify the authenticity of these signatures. Neither do the major credit card brands. Further, even when fraudulent transactions do occur, checking for forged signatures isn’t realistic or feasible.
Merchants would have to keep paper receipts indefinitely. They’d also have to retrieve these records and send hard copies or digital scans to the payment processor.
For small-ticket items, this level of record-keeping would be a huge waste of time. This is why many cards no longer require signatures for purchases under $50.
Even for big-ticket items, however, the swipe-and-sign ritual is becoming increasingly obsolete. In fact, many credit card brands are dropping the signature requirement altogether.
Is this a good idea, though?
The Benefits of Removing Signatures from the Equation
We’ve already seen that signatures don’t offer much protection in the modern age. There’s no one to verify their authenticity. What’s more, even with handwriting experts on staff, it’s relatively easy to forge another person’s John Hancock with enough practice.
In other words, signatures do little to boost security.
They do, however, slow down the checkout process — and that’s kind of a big deal.
Admittedly, the delay isn’t long — maybe 10 to 15 extra seconds per transaction. Nevertheless, when multiplying this, times the billions of POS purchases that happen every year, these delays really start to add up over time.
Card brands are strongly incentivized to remove this unnecessary step. Doing so allows them to:
- Rack up more merchant-side fees.
- Dole out more consumer-side debt.
Retailers also benefit from faster checkouts since they’re able to generate more sales per hour. Again, the difference might not be huge at each individual store. Though when you’re a big-box brand with hundreds (if not thousands) of locations, those extra sales add up, significantly.
Chip-and-PIN Credit Cards — the Final Nail in the Coffin
Swipe and sign is already on its last legs — but there is one final piece of the puzzle that will likely speed up the demise of this time-honored ritual.
These chip-enabled cards offer much greater fraud protection, since:
- The embedded security chip is very difficult to clone.
- The EMV card never leaves the customer’s hands.
Most important? Authorizing each purchase requires a personal identification number (PIN) that only the customer knows.
This final step is far more secure than requiring someone’s signature. As Chip and PIN becomes more widespread throughout the U.S., the retail and payment card industries will likely abandon swipe and sign forever.