Swiping credit cards is passé, signing will soon be too

credit card chip readers don't need signaturesAt the end of April, four of the biggest credit card networks announced they’re no longer requiring signatures for their credit card transactions. American Express, Discover, Mastercard and Visa have all decided to jettison the past and get with present reality of chip-based security.

It’s going to be up to individual retailers to decide about signatures for purchases, but, according to the New York Times, it’s likely most will forgo the John Hancock requirement. Has anyone figured out how to provide a legible response with those horrible “pens” and wrong-height screens anyway? It’s embarrassing to leave that kiddy scribble behind for others to see.

Why are chip cards better?

Chip cards are technically called EMV, an acronym for Europay, Master, Visa – the companies that jointly created this global security standard. This applies to both debit and credit cards.

There are two aspects to this card that make it more secure. That magnetic strip of the past is a lot easier to steal information from. The chip inserts into a reader (instead of swiping) and uses a computer chip to carry validating data, making it almost impossible to replicate. Encryption software means the chip actually talks back and forth with the payment terminal in secret code fraudsters can’t understand.

The chip also gives more control for “offline” credit card transaction approvals. Where one could buy or make a skimmer for about $20, the data on a chip card constantly changes. Technology would cost $1 million or more to crack these little buggers. Embezzlement’s easier, cheaper and only becomes a felony at $500 while stealing gets you that kind of jail time at the $200 mark. What fool’s going to invest that kind of dough to reach your credit limit long before they see an ROI?

The U.S. is behind with chip reader smarts

It took us a lot longer in the U.S. than Canada or the E.U to implement, but we’re finally starting to get there. Sure, you’ll go to many little stores that have a “we don’t have a chip reader” sign on their credit card processing device, but most are coming around.

Some stores continue to require signatures because it helps them dispute faulty bill claims. Plus, the penmanship comparison (whose signature on those crappy screen looks anything like what’s on a back of a card?) is long gone as a valid check.

Walmart decided signatures were mostly worthless some time ago. Target’s eliminated signature requirements too.

If you’re going to stores that don’t have a chip reader, you can transfer your credit card information to your phone for chip reader security. Soon, these little guys will get current too, as, like with Square several years ago, it’s going to get more costly for merchants to cover the cost of fraud if they don’t have the new standard authentication technology in place.

Hopefully we’ll all be enjoying shorter checkout lines at the retailers we visit. Sometimes that signature (does it bother you too when someone writes a check in the 10 items or less lanes?) can take more time to process than scanning the groceries you bought. Let’s hope retailers follow the lead of credit card companies who are tossing the signature requirement. Time will tell.