In a move applauded by most retailers, major card brands (Mastercard, Discover, American Express and Discover) will no longer require customers to sign for all of their card payment transactions as of the end of April 2018. At the same time, each card brand will be adding new rules and relaxing existing rules for merchants. Although the signature requirement is not going to disappear overnight, the new system and technology are being phased in, and it is recommended that merchants adopt the new technology sooner rather than later.
The main reason is the advances in digital technology and the constantly evolving landscape of card payment and payment security. Digital authentication technologies such as tokenization, multifactor authentication and biometrics are more secure than the customer signature and also allow for seamless payment transactions.
What other changes will merchant see?
Merchants are encouraged to get up to speed on the recently introduced EMV technology. EMV technology allows card issuers to rely on improved security requirements. EMV technology features credit and debit cards embedded with microprocessor chips that store and protect cardholder data. Microprocessor chips increase security and minimize fraud, offering greater protection to cardholders and merchants. Most banks are already replacing magnetic strip credit cards with microchip-enabled cards.
EMV cards require a PIN rather than a signature to complete a transaction, and behind-the-scenes technology takes care of digital security processes. EMV is a global initiative to beat fraud and protect the sensitive payment data transmitted with every credit or debit card payment. Chip-enabled cards support dynamic authentication and prevent counterfeit fraud with dynamic values existing within each chip that is verified by the point-of-sale device when payment is made, ensuring that the card is authentic.
Visa reports that fraud at EMV enabled merchants has dropped by two-thirds since the security chip standard went live in the USA.
How does these changes impact small businesses?
Although change can be daunting, small business owners who embrace these changes as soon as possible will reap many benefits.
Some of the benefits include:
- Improved customer convenience, because payments can be processed more quickly
- Reduced costs associated with merchants storing and presenting signatures back to the card issuer
- Reduced risk of fraud (and therefore reduced risk of chargebacks)
- As customers become aware, they will trust and choose payments via EMV technology
By upgrading your card payment technology, you are protecting your customers’ sensitive data and also reducing the risk of fraud and the loss of income for your business. You need to also consider the impact of the changes to the rules for merchants that just went into effect at the end of April 2018. Merchants who have not upgraded to chip-reading terminals will be held liable for any credit card fraud that occurs through their business’s card processing system.
Accordingly, there is no reason to wait. Bringing your business into the 21st century of card payment technology will add value to your business and your customers.
For more information about card brands dropping the signature requirement, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.