DFS Discover Financial Services

By AnnaMaria Andriotis 

Visa Inc. is ditching the signature.

The largest U.S. card network announced Friday that merchants, starting in April, will no longer be required to make consumers sign for debit and credit-card purchases, signaling the demise of a procedure that was once a linchpin of keeping transactions secure.

The other major U.S. networks, Mastercard Inc., American Express Co. and Discover Financial Services, in recent months said they would take the same step. The signature will still be used by merchants who choose to keep it and, in Visa's case, will still be required at merchants that don't accept the security chips that are installed in newer cards.

The companies say improved security features, in particular the chips that in recent years have been embedded in most Americans' debit and credit cards, outweigh the security provided by signatures. Some say a written name scrawled on a slip of paper or electronic pad fails to provide much protection these days. Removing the signature will also speed up in-store checkout for many consumers, they add.

Many consumers have caught on -- signing their name with speed rather than with legibility in mind. The increasing number of card transactions in recent years has basically made something that seemed official more mundane.

Some consider it more of a frill and long ago stopped taking it seriously. Colby Gergen, a 28-year old software product manager in Phoenix, says he signs almost every credit card receipt using two triangles. At times, he has used a smiley face.

Mr. Gergen used to sign his full name, then switched to signing only C and G until his signature began to look like two halves of a triangle. One day about three years ago, he figured he'd draw two triangles on a card receipt and see if any store would reject it.

No one did. The new approach is "a combination of speed, laziness and knowing the signature didn't really matter," Mr. Gergen says.

Others are showing off on social media more creative signatures they've offered to merchants, including stick figures, whale drawings and phone numbers asking cashiers or waiters to call them.

Sadie Morrison, co-owner of Portland, Ore.-based Peruvian restaurant Las Primas, takes screenshots of some of the more interesting signage that customers leave on their receipts. Among her favorites: A signature that consisted of two stars, two swirly circles and a stick-figure face with a unibrow and earrings.

Another one read: "You're my favorite Las Primas!"

Some merchants say consumers who play around with their signatures aren't the ones who are likely trying to pay with a stolen credit card. "Someone paying with a stolen credit card isn't likely to spend a lot of time drawing attention to themselves," Ms. Morrison said.

As more commerce has migrated online and to mobile phones, signatures have been replaced by passwords, fingerprint recognition and other biometrics. Many gas stations require entering a ZIP Code instead of a signature when paying with a credit card.

In many countries outside the U.S., debate about signatures long ago became anachronistic. In most of Europe, consumers have used chip credit cards for decades and have had to validate a transaction using a personal identification number, or PIN. The method has also been adopted in Australia and Canada.

In the U.S., chip cards came into mainstream use in 2015. But the credit cards didn't feature the PIN as some card companies feared this would slow transactions. Signatures were largely left in place instead of instituting PINs.

Card companies say that chip cards have helped to reduce fraud and that new measures under way, including biometric identification like fingerprints and facial recognition, will provide additional security in the future.

Visa, which processed $836 billion in U.S. transactions in the third quarter, is requiring chip-cards for the signature change in part to incentivize more merchants to accept chip cards. Card companies say that some types of fraud have declined due to chip cards, because chip transactions generate a unique one-time code that is needed for the transaction to be approved -- a feature that is very difficult to replicate in a counterfeit card. But some merchants have stuck to accepting the magnetic strips on cards that consumers swipe in part due to the costs of installing the technology to accept the new cards.

Card networks have required signatures for decades, though changes implemented over the years loosened that requirement depending on the dollar amount of the transaction. Roughly 75% of Visa U.S.-based debit and credit card transactions currently don't require a signature because they are below certain dollar amounts.

Even so, the fact that signatures have held on for some long amazes some. When Mastercard in October said it was ditching signatures, a consumer wrote on its message board: "Congrats on catching up with the rest of the world, America. About time."

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com

(END) Dow Jones Newswires

January 12, 2018 12:14 ET (17:14 GMT)

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