Should Small Businesses Require Receipt Signatures?

Many merchants breathed a sigh of relief when Visa, Mastercard, Discover, and American Express announced they were no longer collecting signatures on credit card or debit card transactions due to the advent of EMV technology. In this guide, we’ll go into detail about what a credit card receipt is, what information is included on a ticket, why customer signatures were required in the first place, the security standards that replace the signature, and practical tips that cardholders can implement to keep their cards out of the wrong hands.

What is a credit card receipt?

A credit card receipt is a printout or email detailing the components of a transaction. Vendors, retailers, and merchants may provide customers with a credit card receipt, which is proof of transaction for payment of goods and services. The vendor’s POS system generates a token and prints it for the payer.

Of all recent in-store purchases, 86.1% of transactions were completed via EMV technology.

What information is on a credit card receipt?

Since consumer privacy is part of the Fair and Accurate Credit Transactions Act, certain information must be present on a credit card receipt.

Your primary account number: Your PAN is a condensed version of your full card number. Your PAN is typically the last four digits of your full card number.

Transaction information: This includes the date, time, and total transaction amount. Some vendors will itemize each item purchased and its price.

Vendor information: The vendor’s name, address, and merchant ID tells the payment processing system where to send the payment.

Authorization code: This is the approval code for the transaction authorized by the card company. It states the buyer has enough funds available for the purchase.

Should you keep your credit card receipts?

Keeping credit card receipts can be advantageous for customers and businesses. There are several reasons a customer may keep receipts:

Keep in mind that businesses act not only as a supplier but also as a consumer when they purchase products. The reasons a consumer may keep receipts also apply to a business owner when it acts as a consumer. Here are additional reasons a business may keep receipts:

For tax purposes, both for income and expenses (the IRS advises business owners to keep records for three years).

To help prepare financial statements, whether monthly, quarterly, or annually.

To monitor your income and expenses so you can make sound business decisions.

Check your credit card service agreement for any clauses regarding receipts and recordkeeping.

Why were customer signatures required?

For decades, credit card companies relied on receipt signatures to prevent fraud. They required merchants to collect and store customer signatures. If a transaction was disputed, the merchant could produce a signed receipt proving the customer was physically in the store and personally approved the purchase. Without this proof, merchants were on the hook for losses due to chargebacks. They were also liable if the signature on the receipt didn’t match the signature on the file or the card. With the advancement of EMV-compliant card readers, chip readers have replaced customer signatures.

Chip readers are replacing customer signatures.

In 2015, credit card companies began issuing chip cards to consumers. This shifted liability for counterfeit fraud occurring at the point of sale to merchants who hadn’t yet upgraded to EMV-compliant card readers. This laid the groundwork to move away from signatures since chip cards and digital wallets have advanced anti-fraud technologies – such as tokenization and biometrics – to authenticate transactions. This technology renders credit card signature requirements obsolete.

For decades, signatures were kept on file to verify card transactions, but advancements in anti-fraud technologies have made the practice obsolete.

How no-signature transactions work

Prior to EMV technology, signing a receipt was the standard for authenticating a credit card purchase. As of June 2021, Visa, Discover, Mastercard, and American Express eliminated customer signatures on all credit card purchases. Signature requirements did not prevent fraud, and the process wasn’t as secure. Credit card companies found a faster way to protect the cardholder from fraud or inauthentic transactions while speeding up the in-store checkout process. Here are three things you should know about the process of no-signature transactions:

The cardholder retains possession of the card. Previously, some merchants would be in charge of the swipe. This allowed for card skimming – or card duplication – if it wound up in the hands of the wrong merchant.

When you insert your chip card into a top POS system, you’ll see a “do not remove card” message. During this time, the chip, which is the microcomputer on the card, sends a letter to the credit card company, and the credit card company replies. Once it’s authenticated, the cardholder is prompted to remove the card.

Every chip-card transaction generates an unrepeatable code. If a hacker accesses your transaction number, that number would not work for future purchases and would alert EMV technology to the scam.

In 2018, the big four credit card companies allowed EMV-compliant merchants to expedite signature-free checkout. Big-box retailers such as Walmart and Target applauded the decision. A speedier checkout process, eliminating the need to save receipts and using resources to store receipts, factored into the adoption of EMV.

EMV is not just a technology but a brand. Europay, Mastercard, and Visa, known collectively as EMV, is a global brand that started in the 1990s with the purpose of eliminating credit card fraud.

Should your business stop asking customers to sign credit card receipts?

Even though large retailers quickly dropped their credit card signature requirements following the card brands’ announcements, some merchants continue to collect customer signatures on debit and credit card transactions.

Before you decide which option makes the most sense for your business, here are a few factors to consider.

Is your business EMV compliant?

If you haven’t yet updated your credit card readers to EMV-compliant models, you aren’t eligible to skip signature verification for Visa and Discover transactions.

Visa reports that, as of March 2019, 75% of U.S. storefronts have embraced EMV technology. That leaves 25% that have yet to upgrade their systems. If you’re still holding out on EMV technology, speak with your credit card processor about updating your card reader. In addition to enabling you to stop collecting receipt signatures, it significantly lowers your risk of counterfeit credit card fraud at the point of sale.

Despite the lack of a signature requirement for the past year, EMV technology has been effective against fraud. Visa reports that, as of September 2018, EMV-compliant merchants have seen counterfeit fraud drop 76% since September 2015. EMV has increased in popularity for merchants and consumers. Currently, EMV accounts for 86.1% of in-store transactions. [Interested in the best credit card processing for your business? Check out our reviews and top picks.]

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