Thursday, May 30, 2013

Why Sometimes You Don't Have To Sign For A Credit Card Transaction

Why does Starbucks not need my signature on payment receipt when I pay by credit card?

All other restaurants and cafes need my signature on payment receipts when I pay by credit card. How does Starbucks do it without my signature?

This is an operational decision based on risk.

Close your eyes and think for a moment what happens to that little piece of paper with your signature on it.

Now, try to imagine...
All of the credit card paying customers from the 9,462 company-owned Starbucks from all around the world millions of tiny slips of papers with signatures on them being created every day, virtually all of them useless (certain exceptions apply) the human effort (and their related costs) it would take to store, transport, organize and categorize them in such a way that would make it easy to find, in case one of those pieces of paper are actually needed
The easiest way to understand the reasoning behind this procedure is familiarize yourself with chargebacks.  A chargeback is when a merchant receives notification from a credit card company claiming their customer is saying, "I never bought that."

A hypothetical example
Say you get your credit card bill at the end of the month.  You examine all the charges or verify them against your receipts.  You discover one item that appears to be a mistake.  "Hey, I've never even been to [company XYZ]," you silently say to yourself. You contact the credit card company, disputing the charge.  The credit card company generates a chargeback notice and sends it to the merchant.  This basically means they have reversed the charge.  The money that has been paid to the merchant for your credit card transaction has now been taken back.  The merchant is now without the sales proceeds and the inventory you presumably took.  They are mad.

For the rest of the story:

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