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Why the requirements of the credit card signature are now a thing of the past

Credit card firms are now on the path of outdated carbon copy receipts: discarded in favor of optimized transactions.

The three major credit card companies will stop requiring signatures on purchases this week, with MasterCard, American Express and Discover relaxing their policies on Friday and Visa with the schedule set for Saturday. This does not mean that you will not be asked to sign receipts ever again, but the change is likely to generate less John Hancocks landing on the dotted line.

The reason for the change is due to technology and changing consumption habits. In an October blog post about pending changes, MasterCard said that more than 4 out of 5 transactions in North America do not require a signature in the payment process.

Getting rid of the signing requirement "is another step in the digital evolution of payment and payment security," MasterCard executive VP Linda Kirkpatrick wrote on the blog.

Invest in other ways to fight fraud

That might seem like a contradictory claim: after all, it was believed that firms protected consumers against fraud. But most stores do not verify the signature on the back of a card against what the customer scribbles on the dotted line, in part because most use point-of-sale terminals where consumers pass their cards. Store employees today rarely handle the cards themselves.

"It is no longer necessary for people to sign up to buy credit cards it sounds like a much bigger business than it really is," said Matt Schulz, senior industry analyst at CreditCards.com, in a statement sent by email. "The truth is that Americans have already been signing credit card purchases much less frequently over the years because banks know that signatures are not an effective means of combating fraud."

Fraud is still a major problem, but credit card companies are investing in chips, biometrics and other ways to prove a customer's identity.

Credit card companies "have realized that firms simply do not do the job," Schulz said. "After all, it's much easier to forge someone's signature than to know their PIN."

Why credit card companies say it is a benefit to get rid of signatures

Credit card companies want consumers to use their cards more frequently. In his opinion, getting rid of the hassles of transactions can be a way to achieve that.

"Comfort is also a big part of what consumers want when they are buying and paying," wrote MasterCard's Kirkpatrick.

Getting rid of signatures "will accelerate customers through the payment process, provide more consistent experiences for each customer in each purchase, and should decrease the costs associated with the secure storage of signatures," he added.

Generational changes

Millennials are now the largest generation in the country, and they do not like to write scripts, according to BrandChannel, a website about brands. About 41 percent of millennials say they dislike writing in the script, compared to only 24 percent of Americans over 55.

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