Americans will no longer have to sign for credit-card purchases

By A.W. | WASHINGTON, DC

AMERICANS, and people who travel to America, have good reason to celebrate this month. By the end of April, the four major credit-card networks in the country will all stop requiring retailers to collect signatures from customers when completing transactions. Visa, the world’s biggest credit-card issuer, announced in January that signatures would no longer be required from this month for retailers in North America with chip-card readers. For Mastercard, the second-largest, the same change became effective on April 13th, covering purchases in the United States and Canada. American Express, in third place, is dropping the signature requirement this month for retailers around the world. Discover, the fourth, is doing so in the United States, Canada, Mexico and the Caribbean.

Although retailers will have the option of continuing to make customers sign many have signalled they will not do so. Big retail chains such as Walmart and Target have said they will put an end to signatures. Mark Horwedel, the chief executive of the Merchant Advisory Group, which represents major American retailers, told the New York Times that he expects around 75% to do away with signatures by the end of 2018. Already, the credit-card companies do not require signatures for transactions under a certain amount, but soon at most stores they will be gone altogether.

For travellers to these countries the move is good news. The random scribbles that are applied to receipts and digital screens have long ceased to protect purchasers from fraud. All they really do is slow down the check-out process, causing longer lines and raising costs for retailers.

But to Europeans, the news will surely seem slightly puzzling. All the way back in 1994, Visa, Mastercard and Europay developed a standard for credit cards with a computer chip. Soon chip-and-PIN purchases were common across the continent. Rather than verifying their identities with a signature, customers inserted their chip cards into readers and then entered secret PIN codes.

But as The Verge, a news website, has documented, America resisted the change. Fraud was not terribly common, but magnetic-strip credit cards were everywhere, and it would have been complicated and expensive to replace them with chip cards. (This will sound familiar to anyone who wonders why America has not joined the rest of the world in adopting the metric system.) It was not until 2015 that Visa and Mastercard started penalising issuers who did not put chips in their cards, causing Americans finally to adopt them.

The move this month away from chip-and-signature does not imply a switch to the more secure chip-and-PIN. Instead, America will adopt chip-and-, well, nothing. The announcement by the credit-card issuers to drop the signature requirement is an admission that signatures did not really prevent fraud. But they do not claim that abandoning them makes things safer. Once Americans have grown accustomed to the speed and convenience of making credit-card transactions without any sort of identity verification, it might become a lot harder to persuade them to adopt the more time-consuming—but more secure—chip-and-PIN system.

Still, relative to the current system, the change will be a welcome one for anyone doing business in the United States. Just be sure to check your credit-card statements periodically to make sure that no purchases appear on them that are not your own. As with so many things, there’s a price to convenience.