Why Signatures Won’t Go Away

The networks stopped requiring signatures two years ago. Something else is keeping them alive.

“Just sign this receipt and you’ll be all set.” Not being a violent person by nature, it did cross my mind to take the pen and jam it into the checkout counter, glaring defiantly at the clerk, and loudly stating, “NO!”

This is how angry I get at the stupidity of our market.

The payments experience in the United States is like wearing stripes on top and polka dots on the bottom. Both are a cover up, but they co-exist in opposition. That’s what I think about the continuation of a meaningless authentication practice that has been superseded by far better technology.

So, I decided to do a little digging into why this extremely irritating practice is so persistent two years after the card networks announced that signatures were dead and fintech is the Sun King. Here’s what I found.

First, the results from my poll on Twitter. I asked: “In 2018, the card networks eliminated signature requirements. In your opinion, why do merchants still keep asking us to sign a receipt when we pay with our credit card?” I had 17 responses (not statistically significant, but read on):

41.2% – Unaware of Changes

41.2% – Needs updated POS

17.6% – Better Safe than Sorry

So that’s my Twitter-sphere of payments enthusiasts willing to take the poll. Skeptical that almost half the merchant population in the United States is unaware of these changes, I turned to my merchant expert colleagues for their opinion. Here’s what they told me:

“I think it’s less about software and more about consumers and merchants thinking they need it. Especially the older generations.”

“Merchants don’t know and or don’t trust that they don’t need signatures.”

“…some terminals that capture electronic signatures need to have their software updated, but neither acquirers or manufacturers seem to be interested in spending the money.”

A Position of Power

Essentially then, one cohort believes that the acquiring industry doesn’t care what the networks say about signatures. If there’s no perceived financial upside to the change and it’s not mandated, then rule changes can be ignored. Let’s just keep doing it because it’s a sunk cost and changing it would require investments.

But wait. What about acquirers’ ability to update software on the POS device? Isn’t that a core fintech competency that allows acquirers to get new services quickly into market? Shouldn’t this change be part of normal software-compliance updates?

No Virginia, that’s not how compliance updates work. How it works is that someone or some group reviews all the compliance changes scheduled by the networks. Then, they check off all the ones that are required and cherry-pick the rest. If it’s too much effort for too little benefit, and merchants aren’t asking for it, the change gets shelved. Result: software updates relevant to signature capture gather dust.

Then why aren’t merchants taking it upon themselves to eliminate the signature step in their checkout process? Wouldn’t that improve efficiencies in throughput?

Yes, Virginia, it would. But since when has the U.S. payments market become laser-focused on efficiency? We still process millions of checks each year.

This is not exactly a hip market. We do things the way we do things. Except when we don’t, and then we change things, except when we don’t because we don’t want to. It’s the idiotic logic of our free-market system in all its insane glory.

1. Then why don’t merchants just stop the practice? Because, Virginia, the truth is that receipts contain all sorts of information related to the transaction, like refund policies or delivery charges or the all-important survey.

Asking for a signature puts the merchant in a position of power. They can remind consumers who are asking for a refund that the policy is clearly stated on the receipt they signed. Because I always carefully read my entire receipt before I sign it, don’t you?

The Payments Museum

Let me be clear. Signature authentication belongs in the payments museum along with knuckle-busters and checkbooks. The card networks could mandate the change, but that’s not going to happen. So, let’s consider why merchants still ask for signatures:

Ignorance of Changes It’s likely they received some kind of update regarding this (I’m being kind), and simply didn’t read it.  However, acquirers could keep it on the list of update notices and periodically remind them.

Software Update POS software has to be updated periodically, and this update could be included as part of an overall modernization effort by the processor.  One can wish.

Signatures Serve Multiple Purposes Merchants dealing in big-ticket items need to ensure their customers understand refund or delivery policies. But using the card receipt as a communication mechanism lacks technical creativity. I challenge the market to do better!

You may read this piece as a tongue-in-cheek treatment of one of our quaint payment practices here in the United States. I respect that, but don’t turn away from the real issues.

First, the card networks have not been shy about mandating other big changes, so why not this? My guess is that the big processors wanted them to back off as they are still grappling with EMV-related terminal and software upgrades. Announcing this change produced a nice brand bump, though.

Second, merchants have hijacked receipts for purposes unrelated to card authentication. There’s little will to find a better way.

Forget all the pronouncements about the importance of the consumer experience. The truth is, it’s the merchant experience that really matters.