American Express writes an end to signature requirements

Dive Brief:

Beginning in April 2018, American Express plans to end the practice of requiring merchants to collect card users' signatures at point of sale for purchase transactions, according to a company press release.
The company said the change will apply to all American Express-accepting merchants worldwide, as it aims to enable a quicker, simpler and more consistent checkout process for merchants and their customers.
The decision follows an earlier move by American Express to eliminate signature requirements at U.S. merchants for transactions under $50 in the U.S., at Canadian merchants under $100 CAD, and at U.K. merchants under £30.

Dive Insight:

Reports on this decision at The Verge and elsewhere point out that American Express is not the first card network to announces this sort of change, as Discover and Mastercard have also eliminated the signature requirement. Mastercard was actually the first to announce such a change back in October, and Discover followed with its own announcement late last week. All three major card networks are targeting next April for it to take effect.

However, the ultimate decision about whether or not to make customers sign at point-of-sale will be up to each individual merchant and retailer (at least in most places, unless laws or regulations continue to require them). Of course, no merchant is likely to continue collecting signatures for transactions, since eliminating signatures will speed up the checkout process, improve efficiency and probably lead to higher customer satisfaction with the process. To that extent, this movement has competitive value for merchants.

It also has competitive value for the card networks. As American Express noted in its press release, the growth of mobile payments has helped to make signing for purchases a less common practice, although the popularity of those methods has slowed down recently. The card companies themselves are behind some of those mobile payment capabilities, but to keep physical card usage alive in the market, they need to start making it easier and quicker to complete a transaction.

American Express also mentioned increasing EMV chip card adoption as driving change, as card users often can punch in a four-digit PIN instead of needing to sign off on a purchase. Signatures at one point were another layer of defense against fraud, although ultimately the practice wasn't all that secure, something which became more obvious with the advent of EMV. EMV transactions requiring signatures have been more susceptible to fraud than those requiring PINs.

In any case, companies like American Express now rely on artificial intelligence and advanced machine learning algorithms to increase their ability to detect fraud without disrupting ongoing transactions. Signing, once a way of formalizing the purchase agreement, is now more of an archaic formality.