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Signatures haven't been required for credit cards in many other countries for quite some time now. I have often wondered why the US has historically lagged beh

Signatures haven't been required for credit cards in many other countries for quite some time now. I have often wondered why the US has historically lagged behind for everyday banking. (e.g. email money transfers, chip enabled cards, pin number verification, tap to pay)

all_blue_chucks 8y ago
US fraud rates are so low it's cheaper to eat the cost than to change the system. A more interesting question is: why are fraud rates so high elsewhere?
- nness 8y ago
  [The] U.S. the third-highest rate of fraud worldwide, and was the only country to remain in the top three from 2014 to 2016. Additional research from the Nilson Report, October 2016 stated that in 2015 alone, the U.S. accounted for 38.7 percent of the worldwide payment card fraud losses https://due.com/blog/addressing-rising-payment-fraud-rates-u-s/ https://due.com/blog/addressing-rising-payment-fraud-rates-u...
kirillseva 9y ago
because legacy tech wants to be amortised over long time periods. If you start implementing things later you can pick the best tech. US banking was among the first to become digital and thus still has to maintain technical choices of the past
- tankenmate 8y ago
  The UK were the first in the world to have ATMs, so there is plenty of ageing infrastructure in the UK. But the banks were forced (partly by the EU and partly by fraud) to move to chip and pin and they did relatively quickly.
- arghwhat 8y ago
  The resistance to change can be explained much simpler: It benefits only consumers, while costing the banks and payment providers. It's the same excuses for still having critical banking infrastructure written in COBOL.
  - lucozade 8y ago
    > It benefits only consumers, while costing the banks and payment providers Hogwash. Yes I know all bankers live in extinct volcanoes but one thing they know a lot about is money. It is ridiculously expensive to support the US's conservatism when it comes to finance. The lack of chip and pin pales into insignificance compared to their addiction to paper checks, for example. It would be completely in the banks' interests if everyone moved to internet banking, NFC cards etc because the running costs and fraud costs are vastly less. The problem is all those pesky, inertia-laden customers.
    - arghwhat 8y ago
      > The lack of chip and pin pales into insignificance compared to their addiction to paper checks, for example. Paper checks are indeed a silly cost, but NFC provides banks no gain over chip. Chip provides gain over magnet stripe by basically rendering skimmers ineffective, but only basically in that credit card fraud is still a big business. Instead of skimmers, you use trojans or data leaks. Physical credit cards also sell very cheap on the black market. In other words, NFC benefits only consumers, not banks. Chip benefits banks a little bit. > if everyone moved to internet banking, NFC cards etc Those are very different things. Internet banking benefits banks directly because they can shut down local branches and screw over customers (which they do here—I have to drive to a different city to insert cash, and can only do so within very limited hours). NFC has no benefit to them (and might slightly increase fraud that the bank will have to cover by allowing ~$40 withdrawals made wirelessly from quite a far distance). Chip presents a pretty tiny benefit to them. And most certainly, if you have a customer that already use a magnet stripe credit card, giving them an NFC card will result in instant adoption of the feature. We had some statistics when the feature rolled out—it was adopted by everyone with a supported card on the spot. It's much different when you're trying to change a check user to be a credit card user, but that might be more of an issue with the consumer experience with the bank—credit and debit cards over there sound so cumbersome compared to our system where the bank issues both credit and debit cards tied to your account. We don't have the "benefit" card mess. It's a bit too easy to blame user inertia.
- walshemj 8y ago
  Also due to some ODD ideas about banks by some of the founders you have not got the nationwide consolidation you did in the EU - the federal nature and relatively weak central government doesn't help either. With a small number of banks and a stronger central government which can exert pressure you can see why the UK and EU are ahead.
anitil 9y ago
It's especially a mystery because even developments in payments from the US (eg Apple Pay) seem more widely adopted where I am (Aus) than in the US. Anyone with some insight as to why want to chip in?
- vaughanb 9y ago
  > ... chip in Unintentional pun. The US public seems to have a huge reluctance to use the chips in the cards too. It's swipe and sign. (I'm also from Australia and signing for a credit card purchase went away decades ago. PayWave is really popular, my 89 yo mother loves it.)
  - kibwen 8y ago
    US here, got issued a chipped card about a year ago and noticed quickly that any attempt to swipe with my card would be greeted with an error message and instructions to insert the chip. For all systems I've seen, it seems that if the merchant accepts chips and if the card has a chip, the chip must be used, regardless of any user reluctance.
    - bradknowles 8y ago
      If it’s a chip card and the vendor doesn’t use the chip, then they are responsible for all fraudulent transactions. If they do use the chip, then the card issuing bank is responsible for all fraudulent transactions. This rule was supposed to go into place over a year ago. But most places couldn’t be bothered to update their equipment, so it had to be postponed. Even now, many places still can’t be bothered. Makes me care about them just that much less.
    - 220V_USKettle 8y ago
      Most readers I have experimented with in the US will allow a swipe after 3 unsuccesful chip reads (inserting card in opposite direction w/ chip exposed).
  - anitil 8y ago
    Haha you got me!
brandon272 8y ago
In Canada I have not signed for a credit card transaction in years. Everything is tap to pay and chip-and-pin for larger amounts. Extremely convenient. When I go to the U.S. I usually have to produce ID when using my credit card. Is this because I am from out of country or do they do this with everyone paying by credit card?
- adventured 8y ago
  It's because you're from out of country. You'll almost never be asked to produce ID with a standard credit card purchase in the US, unless it's unusual in amount. I'm in my late 30s and have never once been asked to produce proof of ID in relation to a standard credit card purchase. Whether at a grocery store, restaurant, etc. I've never seen anyone else have to show ID either, maybe once in the 1980s.
  - bradknowles 8y ago
    I write “please check ID” on the back of all my cards. I’m astonished when someone actually does check my ID. It happens maybe once or twice a year.
    - Jare 8y ago
      I've been doing this for 2 decades. I once had a surreal experience when one store clerk in the US complained that my signature did not match the one in the back of the card. My pleas of "that's not a signature, it's a request to check my ID, which you haven't done" did not move him so I had to request his manager's presence. It only happened once and that was many (15+) years ago, but if you ever wondered if it could happen, yeah it could. :)
    - lightbyte 8y ago
      I do this, and I was very confused to find out that if you try to do this at some government buildings (post office for me) they will completely reject your card and not let you use it.
    - jandrese 8y ago
arghwhat 8y ago
DK never even had credit card signatures. Our systems support it for foreigners, but I was so confused the first time I saw that. Everyone uses NFC credit cards now (and if the amount is over ~$40 or a daily limit has been reached, with pin). For us, chip and pin is basically deprecated, and no one has used magnetic strips in a decade.
- htgb 8y ago
  In Sweden, signatures are available opt-in, but many stores get confused if you press the button for it. –"The system says 'signature needed', was that intentional?" It _is_ practical though, if you forget your pin code and need to pay something. It used to be very common in bars/clubs too, at least before contact-free cards, to speed up the payments.
  - baud147258 8y ago
    I don't if that's even possible here in France. At least I've never see anything that hint it's the case.
  - _delirium 8y ago
    In the UK, I don't think you can opt to sign instead of enter a PIN if it's a PIN terminal and your card has a PIN set. Only if it doesn't have a PIN (as with American cards) will it then automatically ask for a signature. Isn't allowing the user to opt to just bypass the PIN a bit of a security hole? There are a handful of places in the UK that don't have PIN terminals at all and do classic swipe-and-sign transactions, though. The one I encounter most commonly is the onboard cafe car on Great Western Railway trains.
    - htgb 8y ago
      > Isn't allowing the user to opt to just bypass the PIN a bit of a security hole? That's a valid point of view, but I actually believe that the business is taking (the bulk of) the risk. In case of a chargeback, the business has to prove that I made the purchase, and a PIN is better evidence that I actually made it compared to just a signature. This means that businesses might accept signature only for relatively low amounts. Indeed, it's not uncommon that neither is needed for amounts under a couple of lunches or so, to make lunch queues quicker. I assume the throughput is sometimes worth the risk.
pjc50 8y ago
The FT suggests this is a regulation vs competition problem, where regulation has "won": https://www.ft.com/content/03a1f4b0-06d3-11e4-ba32-00144feab7de https://www.ft.com/content/03a1f4b0-06d3-11e4-ba32-00144feab... It's a bit of a prisoners-dilemma thing: new technology can only be adopted with sufficient coordination, but each individual party is only interested in cooperating if they think they will "win" from it more than their competitors. The US seems to be a very bad place for consumer advocacy in general. Perhaps it's seen as "anticapitalist". I don't know if the patchwork regulatory environment of the states helps or hinders this?
- cylinder 8y ago
  I don’t know, Australia’s got only four banks which dominate the market and yet they are pretty aggressive in innovative products. We just got instant bank transfers and that required cooperation amongst them to adopt standards and protocols.
  - joncrane 8y ago
    To me, the culture of Australia has always been that being clever and helpful trumps being richer or beating the other guy. So there is value in companies being known as offering clever, helpful solutions. In the US it's almost exclusively about beating the other guy.
- michaelt 8y ago
  This seems believable to me. I mean, in tech, look at the HTTP "referer" header, which is spelled wrong. Imagine what a hassle it would be to fix that. If there was a Leviathan that could force every vendor and user to eliminate the old spelling or else, it could get done a lot faster.
Grangar 8y ago
Can anyone explain why credit cards are preferred in the US? In the Netherlands they're basically an obscurity, and I couldn't even pay for my groceries with one. We all have debit cards that charge directly from your bank here. Just what does the CC system offer over debit?
- freeone3000 8y ago
  For consumers, credit cards offer benefits, such as cash back, "point rewards" systems, and so on. The price is the same, credit or debit, so why not credit?
  - taobility 8y ago
    IMO, Most American got used to the life use the money in future. CC is the simplest way to loan money from the bank now, and pay it back in future. Meanwhile, the bank also like this, as lots of people wouldn't able to pay the debt on time with full balance, so they can make money from the interest.

all_blue_chucks 8y ago

US fraud rates are so low it's cheaper to eat the cost than to change the system. A more interesting question is: why are fraud rates so high elsewhere?

nness 8y ago
[The] U.S. the third-highest rate of fraud worldwide, and was the only country to remain in the top three from 2014 to 2016. Additional research from the Nilson Report, October 2016 stated that in 2015 alone, the U.S. accounted for 38.7 percent of the worldwide payment card fraud losses https://due.com/blog/addressing-rising-payment-fraud-rates-u-s/ https://due.com/blog/addressing-rising-payment-fraud-rates-u...

kirillseva 9y ago

because legacy tech wants to be amortised over long time periods. If you start implementing things later you can pick the best tech. US banking was among the first to become digital and thus still has to maintain technical choices of the past

tankenmate 8y ago
The UK were the first in the world to have ATMs, so there is plenty of ageing infrastructure in the UK. But the banks were forced (partly by the EU and partly by fraud) to move to chip and pin and they did relatively quickly.
arghwhat 8y ago
The resistance to change can be explained much simpler: It benefits only consumers, while costing the banks and payment providers. It's the same excuses for still having critical banking infrastructure written in COBOL.
- lucozade 8y ago
  > It benefits only consumers, while costing the banks and payment providers Hogwash. Yes I know all bankers live in extinct volcanoes but one thing they know a lot about is money. It is ridiculously expensive to support the US's conservatism when it comes to finance. The lack of chip and pin pales into insignificance compared to their addiction to paper checks, for example. It would be completely in the banks' interests if everyone moved to internet banking, NFC cards etc because the running costs and fraud costs are vastly less. The problem is all those pesky, inertia-laden customers.
  - arghwhat 8y ago
    > The lack of chip and pin pales into insignificance compared to their addiction to paper checks, for example. Paper checks are indeed a silly cost, but NFC provides banks no gain over chip. Chip provides gain over magnet stripe by basically rendering skimmers ineffective, but only basically in that credit card fraud is still a big business. Instead of skimmers, you use trojans or data leaks. Physical credit cards also sell very cheap on the black market. In other words, NFC benefits only consumers, not banks. Chip benefits banks a little bit. > if everyone moved to internet banking, NFC cards etc Those are very different things. Internet banking benefits banks directly because they can shut down local branches and screw over customers (which they do here—I have to drive to a different city to insert cash, and can only do so within very limited hours). NFC has no benefit to them (and might slightly increase fraud that the bank will have to cover by allowing ~$40 withdrawals made wirelessly from quite a far distance). Chip presents a pretty tiny benefit to them. And most certainly, if you have a customer that already use a magnet stripe credit card, giving them an NFC card will result in instant adoption of the feature. We had some statistics when the feature rolled out—it was adopted by everyone with a supported card on the spot. It's much different when you're trying to change a check user to be a credit card user, but that might be more of an issue with the consumer experience with the bank—credit and debit cards over there sound so cumbersome compared to our system where the bank issues both credit and debit cards tied to your account. We don't have the "benefit" card mess. It's a bit too easy to blame user inertia.
walshemj 8y ago
Also due to some ODD ideas about banks by some of the founders you have not got the nationwide consolidation you did in the EU - the federal nature and relatively weak central government doesn't help either. With a small number of banks and a stronger central government which can exert pressure you can see why the UK and EU are ahead.

anitil 9y ago

It's especially a mystery because even developments in payments from the US (eg Apple Pay) seem more widely adopted where I am (Aus) than in the US. Anyone with some insight as to why want to chip in?

vaughanb 9y ago
> ... chip in Unintentional pun. The US public seems to have a huge reluctance to use the chips in the cards too. It's swipe and sign. (I'm also from Australia and signing for a credit card purchase went away decades ago. PayWave is really popular, my 89 yo mother loves it.)
- kibwen 8y ago
  US here, got issued a chipped card about a year ago and noticed quickly that any attempt to swipe with my card would be greeted with an error message and instructions to insert the chip. For all systems I've seen, it seems that if the merchant accepts chips and if the card has a chip, the chip must be used, regardless of any user reluctance.
  - bradknowles 8y ago
    If it’s a chip card and the vendor doesn’t use the chip, then they are responsible for all fraudulent transactions. If they do use the chip, then the card issuing bank is responsible for all fraudulent transactions. This rule was supposed to go into place over a year ago. But most places couldn’t be bothered to update their equipment, so it had to be postponed. Even now, many places still can’t be bothered. Makes me care about them just that much less.
  - 220V_USKettle 8y ago
    Most readers I have experimented with in the US will allow a swipe after 3 unsuccesful chip reads (inserting card in opposite direction w/ chip exposed).
- anitil 8y ago
  Haha you got me!

brandon272 8y ago

In Canada I have not signed for a credit card transaction in years. Everything is tap to pay and chip-and-pin for larger amounts. Extremely convenient. When I go to the U.S. I usually have to produce ID when using my credit card. Is this because I am from out of country or do they do this with everyone paying by credit card?

adventured 8y ago
It's because you're from out of country. You'll almost never be asked to produce ID with a standard credit card purchase in the US, unless it's unusual in amount. I'm in my late 30s and have never once been asked to produce proof of ID in relation to a standard credit card purchase. Whether at a grocery store, restaurant, etc. I've never seen anyone else have to show ID either, maybe once in the 1980s.
- bradknowles 8y ago
  I write “please check ID” on the back of all my cards. I’m astonished when someone actually does check my ID. It happens maybe once or twice a year.
  - Jare 8y ago
    I've been doing this for 2 decades. I once had a surreal experience when one store clerk in the US complained that my signature did not match the one in the back of the card. My pleas of "that's not a signature, it's a request to check my ID, which you haven't done" did not move him so I had to request his manager's presence. It only happened once and that was many (15+) years ago, but if you ever wondered if it could happen, yeah it could. :)
  - lightbyte 8y ago
    I do this, and I was very confused to find out that if you try to do this at some government buildings (post office for me) they will completely reject your card and not let you use it.
  - jandrese 8y ago

arghwhat 8y ago

DK never even had credit card signatures. Our systems support it for foreigners, but I was so confused the first time I saw that. Everyone uses NFC credit cards now (and if the amount is over ~$40 or a daily limit has been reached, with pin). For us, chip and pin is basically deprecated, and no one has used magnetic strips in a decade.

htgb 8y ago
In Sweden, signatures are available opt-in, but many stores get confused if you press the button for it. –"The system says 'signature needed', was that intentional?" It _is_ practical though, if you forget your pin code and need to pay something. It used to be very common in bars/clubs too, at least before contact-free cards, to speed up the payments.
- baud147258 8y ago
  I don't if that's even possible here in France. At least I've never see anything that hint it's the case.
- _delirium 8y ago
  In the UK, I don't think you can opt to sign instead of enter a PIN if it's a PIN terminal and your card has a PIN set. Only if it doesn't have a PIN (as with American cards) will it then automatically ask for a signature. Isn't allowing the user to opt to just bypass the PIN a bit of a security hole? There are a handful of places in the UK that don't have PIN terminals at all and do classic swipe-and-sign transactions, though. The one I encounter most commonly is the onboard cafe car on Great Western Railway trains.
  - htgb 8y ago
    > Isn't allowing the user to opt to just bypass the PIN a bit of a security hole? That's a valid point of view, but I actually believe that the business is taking (the bulk of) the risk. In case of a chargeback, the business has to prove that I made the purchase, and a PIN is better evidence that I actually made it compared to just a signature. This means that businesses might accept signature only for relatively low amounts. Indeed, it's not uncommon that neither is needed for amounts under a couple of lunches or so, to make lunch queues quicker. I assume the throughput is sometimes worth the risk.

pjc50 8y ago

The FT suggests this is a regulation vs competition problem, where regulation has "won": https://www.ft.com/content/03a1f4b0-06d3-11e4-ba32-00144feab7de https://www.ft.com/content/03a1f4b0-06d3-11e4-ba32-00144feab... It's a bit of a prisoners-dilemma thing: new technology can only be adopted with sufficient coordination, but each individual party is only interested in cooperating if they think they will "win" from it more than their competitors. The US seems to be a very bad place for consumer advocacy in general. Perhaps it's seen as "anticapitalist". I don't know if the patchwork regulatory environment of the states helps or hinders this?

cylinder 8y ago
I don’t know, Australia’s got only four banks which dominate the market and yet they are pretty aggressive in innovative products. We just got instant bank transfers and that required cooperation amongst them to adopt standards and protocols.
- joncrane 8y ago
  To me, the culture of Australia has always been that being clever and helpful trumps being richer or beating the other guy. So there is value in companies being known as offering clever, helpful solutions. In the US it's almost exclusively about beating the other guy.
michaelt 8y ago
This seems believable to me. I mean, in tech, look at the HTTP "referer" header, which is spelled wrong. Imagine what a hassle it would be to fix that. If there was a Leviathan that could force every vendor and user to eliminate the old spelling or else, it could get done a lot faster.

Grangar 8y ago

Can anyone explain why credit cards are preferred in the US? In the Netherlands they're basically an obscurity, and I couldn't even pay for my groceries with one. We all have debit cards that charge directly from your bank here. Just what does the CC system offer over debit?

freeone3000 8y ago
For consumers, credit cards offer benefits, such as cash back, "point rewards" systems, and so on. The price is the same, credit or debit, so why not credit?
- taobility 8y ago
  IMO, Most American got used to the life use the money in future. CC is the simplest way to loan money from the bank now, and pay it back in future. Meanwhile, the bank also like this, as lots of people wouldn't able to pay the debt on time with full balance, so they can make money from the interest.