Is Visa's buy-in necessary to kill signature authentication?
Visa has been a strong proponent of signature authentication in EMV as an alternative to PIN, but it isn't really an either/or battle. Conceding on signature doesn't mean going all-in on PIN. And through its silence, Visa may actually be saying there is no reason to declare the obvious — that signature scribbled on the back of a card is a dated and increasingly ineffective way to handle security.
"With Visa, I look at it as they feel they have already positioned themselves with not using or relying on signature," said Brian Riley, director of card services for Mercator Advisory Group. "They don't particularly need a policy on what will happen on whether the terminal requests signature or not. They would say they've pretty much already been doing this."
Visa says it has no announcement to make at this time regarding signature, but it did provide a statement that downplays the scope of the issue.
"Visa supports multiple technologies to bring speed, security and consumer convenience to the authentication and authorization process. Today, more than 75% of Visa card face-to-face transactions in North America do not require a signature," the card brand said in an e-mailed statement.
Transactions may not require a signature if they are up to or less than $50 in a grocery store or warehouse store setting, or up to or less than $25 for all other transactions.
Mastercard also had a transaction flow in which up to 80% would qualify for no signature under its current rules, but it chose the two-year anniversary date of the EMV liability shift to reveal its intention to totally drop signature.
"Well over 50% of merchants are accepting EMV products and 80% of cards are enabled with some sort of chip on them, and that's maturity in the market," said Linda Kirkpatrick, Mastercard's executive vice president of business development.
With other advancements in mobile, contactless and biometrics, Mastercard saw an opportunity to "go the extra mile" and eliminate any confusion by dropping signature authentication on transactions of any value in any merchant category code, Kirkpatrick said.
One caveat is that merchants can still decide to accept signature if they desire. It would also mean they would continue to store signature data in case of disputed transactions — even though it is an accurate argument that most retail clerks never bother to look at a signature, whether jotted on paper or scribbled on a screen.
Still, some merchant groups would prefer a landscape in which the card brands are unified in their policies on card authentication.
"I cannot imagine Visa not moving on this, although Mastercard's announcement may have caught them by surprise," said Mark Horwedel, CEO of the Merchant Advisory Group, which has long challenged Visa on its stance to encourage keeping signature in place rather than mandating PIN as a complement to EMV chip cards.
"Large merchants have the ability to differentiate at the POS, prompting for signatures on Visa while waiving the requirement on other cards," Horwedel said. "Visa issuers will be disadvantaged."
Visa says its signature debit market is part of the 75% it includes when calculating the non-signature transactions in North America.
"While they've spent most of their energy condemning PIN, they've yet to provide a meaningful means for cardholders to authenticate themselves on most purchases," Horwedel said. "The feedback from merchants with whom I've spoken is that most plan to stop requiring signatures as soon as they can execute the change."
In a grocery store setting, getting rid of signature translates to speed at the POS in a place where it needs it the most.
"Doing away with that headache for us in the store is huge," said Hannah Walker, senior director of technology and nutrition policy for the Food Marketing Institute. Signature is already waived for transactions up to $50 (in grocery stores) and "some of my larger retailers have already previously signed agreements with some of the larger issuing banks to go higher," Walker added.
Still, Walker senses that it would be a much smoother transition if Visa were also on board.
If Visa doesn't also eliminate the signature requirement "you run the risk, on Visa's part, of becoming bottom-of-wallet," Walker said.
However, it doesn't appear to be a major concern for merchants as to how to go about enabling their POS terminals to prompt the proper transaction routing, depending on what card is presented.
"The conversations with merchants have been really positive in terms of their ability to change their POS quickly and work with the brands with no signature requirement," Mastercard's Kirkpatrick said. "They can make the software changes, so the lift (merchant burden) is not all that great, and they are able to do it, brand by brand."
More than anything else, merchants are clearly seeing the benefit in eliminating friction for customers, Kirkpatrick said.
Mercator's Riley also doesn't foresee any issues for merchants who would potentially try to save signatures in their databases for some transactions, but not for others.
"I don't think there is much storage of signatures these days anyway," Riley said. "Let's put it this way: It has no value, and no handwriting expert could find much basis in it."
Because of that, transaction disputes would rarely focus on signatures as the key factor, Riley added.
"Any dispute would go through the EMV compliance channels," he said. "There just is not a lot of risk here."
Daniel Wolfe contributed reporting to this story.