Why Do Merchants Still Require Signatures for Credit Card Purchases?

Earlier this year the four major credit card companies (MasterCard, Visa, American Express, and Discover) announced that they would no longer require customers to sign for their credit card purchases, regardless of the dollar amount. The signature is a long way off from dead, however. We took a look at the top three reasons why merchants still require signatures for credit card purchases. Here’s what we found.

Many Merchants Simply Aren’t Aware of the Change

If this is all news to you, let us be the first to give you the good news – you no longer need to ask your customers to sign for their purchases! Even if your customer is making a purchase of several thousand dollars (or even several million), there is no longer any requirement to obtain a signature in your merchant processing agreement. This means you can now speed up the checkout process, resulting in happier customers and the ability to make more sales in a business day.

Some Businesses Need Signatures

For some merchants, the concept of a signature at the time of purchase is deeply engrained in the sales process. For example, a restaurant owner whose wait staff drops off checks and then picks them up after the tip has been manually added is not likely to want to give up that signature on the receipt. Many merchants from contractors to high-end furniture stores use signatures to acknowledge receipt of delivered goods, agree to a scope of work, or formalize a contract. In these cases it certainly still makes sense to ask for signatures at the point of sale – just know you’re not protecting your business from credit card fraud by doing so. Even if these situations don’t apply to you, read why you still might want to consider a signature in this post.

Hardware Changes are Sometimes Required

The inconvenient truth of the matter is that you can’t just suddenly stop asking for signatures – not really, at least. Most older point of sale systems are programmed to prompt for a signature, either on the receipt or on the device itself, and turning off this feature often requires more than just tweaking a setting. Give your credit card processor a call to see if they are able to adjust the settings on their end, but be prepared to cough up some cash for a new machine to make the prompts go away entirely. This is not the end of the world, of course, since newer POS systems offer other benefits in terms of speed, security, and customer experience, but they do cost several hundred dollars in some cases.

Should I Be Asking for a Signature?

In the end, the answer to this question is up to you. You know your business – the products and services you sell and their price points, the kinds of customers that shop with you, and the kinds of fraud and chargeback issues you encounter. Many merchants adopt a “better safe than sorry” approach to signatures, but the fact is that having a signature on the receipt won’t do much to combat chargebacks and fraud allegations anymore. Payment technology has simply moved beyond that. Whether or not you choose to require signatures for credit card purchases, know that the impetus is no longer coming from the credit card companies – it’s coming from you. If you have any questions about this process or want to learn more about the changes in signature requirements, give us a call or drop us a line on our website. We’d love to help!

PS – Get ready for the holiday shipping rush with our guide.

PPS – Tired of credit card processing reps beating down your door? Here’s how to send them packing.