The credit card and retail sectors are experiencing a big shake up in 2018. MasterCard, Discover, American Express and Visa have all noted that signatures for EMV transactions will no longer be required within the coming months. Citing advancements in credit card security and merchant failure to verify authenticity, the decades-old practice is being disrupted.
Now, this might sound like a huge change in protocol and — to a degree — it is. Businesses are used to requesting a signature for every transaction they process. This takes up customers’ time at checkout, and takes up businesses’ time with paper receipt filing, boxing and storing. Additionally, businesses pay for associated paper receipt costs, including receipt paper, storage space and printer ink.
But before you throw out your supplies and protocols, it’s important to note that there will still be instances when you need a signature. In fact, these instances could account for upwards of 50 percent of the time. Why? Because there will still be four scenarios when you will need or want to collect signatures from your customers — even with this recent shift.
We’ll outline each edge case below and provide a solution to help your staff maintain the right protocols for credit card authorization.
- Accepting Magstripe Cards
You might be wondering why signatures will still be required for about half of your transactions. It’s because U.S. EMV adoption is at 52 percent, according to EMVCo.
That means that about 48 percent of card payments are still made with traditional magstripe cards. The card brands’ rule change does not apply to these cards. In other words, you’ll still need a signature for these transactions. If you fail to capture one and get hit with a credit card dispute, you’ll lose that chargeback by default and be liable for the cost of the dispute. Furthermore, fraudsters know that non-EMV businesses are increasingly few and far between, making late adopters a target for fraud.
Now, you may already have an EMV-capable terminal, but it might not be EMV certified due to lengthy EMV-certification queues and high costs for providers. This is bound to be the case if your terminal features a EMV chip card reader that is out of service. If you swipe an EMV chip card, you will lose all the anti-fraud benefits that make EMV cards more secure, increasing your business’s vulnerability to fraud. To properly process EMV transactions without the need for a signature, you need an EMV-certified terminal that can correctly process these transactions.
- Requesting a Tip
In many service industries, like the food and drink industry, it’s customary for cardholders to leave tip on their receipts. Until table-side credit card terminals become commonplace in the U.S., restaurants, salons and other service-industry businesses will still need to print receipts and obtain signatures along with tip amounts. This gives these businesses the green light to edit transaction amounts and record the tips in their point-of-sale systems.
- EMV Fallback
EMV fallback occurs when an EMV chip card fails and has to be swiped instead of inserted in an EMV reader. As is the case when an EMV terminal that lacks certification, this results in a less secure transaction and makes it necessary to obtain a signature for the purchase. An EMV fallback can be triggered by a brief technical glitch or if your terminal isn’t capable of distinguishing between a chip card and a magstripe card and directing customers to insert or swipe accordingly.
Look for this recognition capability if you’re in the market for a new credit card terminal. That way, your customers will be corrected if they incorrectly process their payments, and you will be sure to obtain signatures when necessary.
- Document Authorization
Credit card terminals aren’t just for payment. With more businesses going green with their technology, there’s been a rise in those opting for signature pads and digital authorization over printed waivers, terms and conditions. Anything your business needs to acknowledge can be signed for with the right credit card terminal, allowing you to process payments and obtain authorization for terms or warranties all within one interaction and with one device.
Items you may wish to obtain authorization for include:
- Refund policies
- Shipping policies
The possibility that something could be disputed in the future is reason enough to obtain a signature before a consultation, appointment or purchase.
Go Digital and Always Obtain Authorization (When Needed)
It never hurts to request a signature at checkout, and it might be the better option if you’re worried about missing the edge cases noted above. You won’t be as comfortable with the routine of accepting signatures, filing paper receipts and carting and boxing them for long-term storage as time moves on.
One way to safeguard your business and only request signatures when necessary entails going digital with your credit card receipts. With a smart terminal, you can require authorization on magstripe cards only or when an EMV fallback occurs. Go digital and store all your transactions in a virtual terminal that is capable of protecting your digital receipts in the long term.
Other benefits of virtual terminals include easy online searching when a dispute occurs, automated business reporting, transaction histories and much more. The edge cases noted above will be handled, while your business will experience numerous operational benefits that it would not have with paper receipts.