Credit Card Question

At more and more retail stores I am no longer required to sign something after swiping my credit card. There is usually a dollar limit, but for example at Costco I can swipe my Amex and not have to sign for anything less than $100.

Since anyone can steal my card and charge something without anyone checking for my signature I assume the credit card company, not the retailer, is taking the additional risk associated with fraud.

Since this trend seems to be spreading, will there come a time when I will never have to sign for a credit card charge? Will some biometric form of ID be used to verify I am the legal owner of the credit card or won’t they even care in the future?

For a store, the time saved at the checkout (less cashier time, fewer cashiers needed) is the main factor. The decreased costs to the store from that time saving is compared to the cost of losses from stolen credit cards, and used to set the dollar amount to require a signature. Since only a tiny proportion of credit cards are stolen, and the hourly costs of operating & staffing a checkout are pretty high, the ‘signing amount’ is often surprisingly low.

The customer goodwill from not requiring a signature (& faster checkout lines) is just an extra bonus.

To answer your question more specifically, what you are seeing is often called Fast Pay or Quick pay. Imagine a fast food drive thru trying to get signatures back during the lunch rush, not a good idea as far as speed of service goes.

That said, Visa and MasterCard both have limits on what they will accept as fast pay transactions due to risk. The limit for each is different, but both are around $50 IIRC. Many businesses will enable fast pay for anything under $30 or so just to save time.

The actual terminal that cards are run through can be set to different limits for fast pay, but the merchant is always at risk.

Say you go into Costco and pay for $20 worth of goods. They don’t have you sign because it’s a low amount, and they want speed of service. If you dispute that charge, they would be asked for a signed copy of the receipt, and any other documentation associated with the sale. You never signed anything, so that makes it a bit harder for them to defend their end of the transaction.

Your were using an Amex card too. They operate on their own set of rules. Only recently did Discover change over to a “bank-card” type of processing. They are now treated more or less like Visa and MasterCard in some senses.

Amex does what they want. Period. They issue separate deposits to merchant accounts from the other card types, will not speak with ISO’s or merchant acquirers on behalf of a merchant. You can bet that the $100 transaction limit shifts the risk to either the merchant or the card holder. Amex does what they want. Period. They’re also the only company that wants you to pay a full balance every month. Visa and MasterCard thrive off of late fees and other charges.

And what exactly is a signature supposed to do, anyway? A person deliberately drawing their signature in a way different from normal and then claiming it was stolen seems just as likely as a thief stealing the card and forging the signature.

Biometrics are not as widespread as they can be now, but it will be common soon enough.

I installed a fingerprint scanning system at a place that sold pizza and chicken in a no-name town in Ohio, and that was 4 years ago. They clock in and take orders based on biometrics, and it really was not expensive at all. Thumb prints will replace PINs within 10 years, for the most part.

True, but when a card is stolen, there is usually a very fast paced series of purchases made so that the thief can get as much as possible out of the card before it’s cancelled. A person refuting a charge can say a number of things, the card being stolen is only one. They can say they don’t remember the charge, or even request further documentation. If they have the card cancelled it’s an inconvenience to the cardholder too, but yes there is fraud sometimes.

All my Canadian CCs have a PIN that I must enter. No signature at all. It’s usually pretty fast. Some merchants (fewer and fewer) lack the readers and those require signatures.

Yes, in the UK the standard is “chip and pin”, whereby you stick the card into a machine and type in a four-digit personal PIN identification number. It’s the same number that you use when you withdraw cash from the automatic ATM teller machine. See what I did there? Doesn’t even make sense, because we don’t have ATMs here in Merrie England, we have cashpoints, which are they same thing but in English.

Come And See! Hello Person, Our Intelligent Network Taste: Smile!, that’s what CASHPOINT might stand for if it was an acronym, which it is not.

Loads of places now have chip and pin, including McDonald’s, which is a killer because it’s so easy to buy things electronically. It’s just like spending money, but without the fear and sickness, because it’s just a number. You don’t see the money leave your account.

We’ve done this before, but the general consensus is that you will win if you contest the charges the first time. If you contest them many times, the banks will catch on to you.

From the merchant’s perspective, the number of people who challenge a $20 purchase is minute. They have calculated that there is more profit in speedier checkouts than losing a couple bucks on the few charge backs they get.

Both true. Part of my job is to review a spreadsheet with all the chargeback info for all our merchants on a weekly basis. We have a bit under 1000 merchants yet the report is not usually very long at all. One thing that is almost guaranteed on every report is that there will be numerous chargebacks for the “gentlemen’s clubs” we service. Other business types tend to show up all the time as well.

Too many chargebacks, or a bad enough sales to chargeback ratio can get your account flagged though, and TPTB will start to levy fees and classify you as an at risk merchant. The worst case would result in your merchant account being terminated, and even worse you could be listed on the MATCH file which is like a black list for merchants, very bad.

If you reported fraudulent transactions, there would likely be almost zero risk to the credit card companies. They have the merchant and their merchant acquirer or ISO to carry that risk burden. Fast pay is an option that the merchant opts into, and the acquirer or ISO facilitates for them. Visa and Mastercard do set thresholds as said before, so that’s there to mitigate at least some risk. I’ll look into the specifics to see if they carry ANY risk at all for this type of transaction.

It looks like the cardholder’s issuing bank bears the risk of a chargeback, assuming the merchant was fully qualified to accept that type of transaction and followed the limitations set forth by Visa/Mastercard/Amex etc.

Everything stated above about how the bank and cardholder deal with the chargeback still applies.

Instead of my real signature, if the signature device is electronic instead of a paper receipt then I instead draw a smiley face - literally, a circle, three dots for eyes & nose, and a smile. For some reason that I can’t substantiate, I don’t want my true signature being captured electronically.

For over three years it has almost always been accepted and many clerks enjoy it. Only once was it rejected, at a Disney World souvenir store. I just scribbled something else.