MasterCard to Retire Signature Requirements in 2018


Signatures on credit and debit card transactions in North America may become a thing of the past, if MasterCard has its way. On Thursday, October 19, 2017, MasterCard announced that effective April 13, 2018, it will drop the rule requiring merchants to get signatures on MasterCard transactions.

Eliminating the need for signatures is another step in the digital evolution of payments and payment security. At first glance, this might sound like a radical proclamation, especially to people who have had credit and debit cards for decades. However, the change matches all of our expectations for fast and convenient shopping experiences.

MasterCard’s consumer research found that a majority of people believe it would be easier to pay and that checkout lines would move faster if they didn’t need to sign when making a purchase. The move will also help merchants speed customers through checkout, provide more consistent experiences for every customer with every purchase and should decrease costs associated with safely storing signatures.

It is important to note that it still remains to be seen how this change will impact card-not-present (CNP) merchants that take card data over the phone. Signatures have long been required to avoid disputes and chargebacks, so we’ll have to followup on this post with updates from our processor partners on how they view this new development.
According to our research, most consumers and retail merchants are ready for this evolution. Look for these changes to start speeding customers through in-store checkouts in April 2018. More to come on CNP merchants.

If you have any questions about this change and how it may affect your payment processing, feel free to reach out! I’d love to answer any questions you may have. You can email me at kim@pathpayments.com or call (303) 653-7964.

Class Action Suit Vacated


For everyone waiting to get their stipend of overcharges from the credit card associations, you'll have a wait a little longer. On June 30, 2016, a federal appeals court threw out the settlement between Visa and MasterCard and retailers across the globe.

The settlement had been struck in 2012 and approved by the court in 2013. Visa and MasterCard originally agreed to pay merchants $7.25 billion, based on a formula that used card acceptance volumes over a period of 10 years in the past. The agreement also allowed retailers to charge fees to customers that used credit cards as payment, but only when a strict set of policies were followed.

The three judge panel's unanimous decision to upend the settlement was based on evidence that some of the merchants covered by the agreement were not adequately represented in the suit, and that the constraints placed on merchants preventing them from suing the card brands in the future over fees was “unreasonable".

Some 8,000 merchants, mostly big box retailers representing 25% of the purchase volume impacted by the suit, had opted out of the suit because of this provision, and recently Wal-mart and Kroger filed lawsuits against Visa seeking to force the use of a PIN for all chip-enabled debit card transactions, which would eliminate the more expensive, and less secure option of signing for those transactions.

Besides the burden of implementing EMV technologies to your business, the longstanding aggravation with out-of-control card brand fees seems to be with us for the foreseeable future. New litigation on fees could take many years to get organized again.

If you have questions about the topic, or any issue related to processing electronic payments, give PATH a call at (855) 393-2329.

EMV - What Should I Do?


Contrary to what some will tell you, the Thursday, October 1, 2015 deadline for implementing an EMV compatible solution for your business was not doomsday, and you are not “out of compliance” by not upgrading to EMV technology.

You will still be able to process magnetic stripe transactions on your terminals beyond 10/1/15. Automated fuel dispensers and ATMs have until October 2017 to meet the requirement, so magnetic stripes will not be disappearing from credit cards anytime soon. That said, banks expect to reach 100% implementation by 2020, so you do have to act, if you accept credit cards in a face-to-face environment.

Delaying upgrading your equipment, however, does come with a cost. The primary purpose of embedding a chip in a card is to eliminate the magnetic stripe from cards in the future, greatly reducing card present fraud. The cardholder data can be easily skimmed and duplicated from a magnetic stripe in a matter of seconds. The chip is updated with a random number every time it is “dipped” in an EMV card reader. This prevents it from being duplicated in a counterfeit card.

So why should you care and take the steps to upgrade your equipment in the face-to-face environment? Simply put - liability shift! In the past, the card brands have covered the cost of fraudulent transactions and reimbursed merchants for transactions made with a counterfeit or stolen credit card. That is what changed on 10/1/2015. If you “swipe” a card that has an embedded EMV chip, because you do not have a chip reader in your equipment, you will lose any dispute that is lodged reporting that transaction “fraudulent”.

The card issuing bank will accept no documentation or evidence other than the codes transmitted when the card is “dipped” in a chip card reader, period. This has given rise to a totally new form of fraud, when a customer conducts a valid transaction at your place of business, and then reports the card was stolen. You will lose this dispute in almost 100% of the cases, unless you “dipped” the card.

Costs for chip enabled terminals have come down in the last year so depending on the model purchased, they can run from around $150 to $200 for a standard countertop terminal. Digital signature capture or mobile terminals will come with a higher price tag. Don’t buy a terminal over the internet and expect it to work with your processor, or with your point-of-sale. In addition, not every terminal is supported by every processor, and many POS providers are still in the process of certifying an EMV terminal for their systems. It’s best to first check with an independent broker of merchant services to avoid paying too much, or buying something that won’t work for you.

EMV is here to stay, and if you process credit cards face-to-face, you will have to upgrade sometime in the near future. It’s probably time to make this investment now, so that you don’t lose a large disputed chip card transaction.

If you have questions about the topic, or any issue related to processing electronic payments, give PATH a call at (855) 393-2329.

Surcharging - Should I?


Credit and debit card fees imposed by the card brands and card issuing banks have long been a major source of irritation to the business owner. How and when to add convenience fees to credit card transactions has been fiercely debated ever since the 2013 class action settlement was announced.

Payment card surcharges, also known as checkout fees, are restricted in 10 states: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas. Merchants operating across multiple regions have the option of imposing surcharges in regions that support the practice, but many state regulations remain in flux due to ongoing litigation, with some predicting that a final decision will only come when this is escalated to the Supreme Court.

For merchants, the primary concern must be assessing the impact of surcharging on their customers’ experience. Businesses with high-ticket items would need to assess a hefty toll on customers buying their products or services. Will that drive customers to a competitor that doesn’t surcharge for using a credit card? Would a “cash discount” be a more palatable approach to covering costs? Price your product to cover the estimated fees and then give customers paying cash a discount.

There is much to contemplate when considering adding surcharges to payments made by credit card. The Card Brands impose various rules and conditions on surcharging. 

To list a few:
  • Notification- The Card Brand, and processor, must be notified at least 30 days in advance of your surcharging practice.
  • Disclosure- Signage informing consumers of merchant fees connected with their bankcard purchases must be posted in-store at merchant entryways, at POS devices and on payment receipts. E-commerce disclosures must be visible on the first page displaying credit card brands.
  • Fee Limits- Surcharging applies to credit cards only and may not exceed a merchant's discount rate or 4 percent, whichever is lower. Surcharging is not permitted on debit and prepaid cards. Merchants may not require minimum purchases for credit card sales. “Convenience fees” are a separate matter, and can only be levied for the privilege of paying for a product or service using an “alternative payment channel, or a payment method that is not standard for the merchant”.

As you can see, it’s more complicated that just adding a fee to the cost of a transaction, and much more involved than what can be discussed in this forum. You should contact your merchant services provider to see if surcharging is right for your business. The first step is to insure that the fees that you are paying to process electronic payments are the lowest possible for your business.

If you have questions about the topic, or any issue related to processing electronic payments, give PATH a call at (855) 393-2329