Every time I’m asked to sign a credit card receipt, I’ve wondered “how much does this archaic practice cost?”. I finally decided to do the math.
First, a few words on why signing receipts is completely pointless. The reason we’re supposed to sign is so the merchant can verify the signature to reduce fraud. If the customer charges back a transaction, the bank will ask the merchant to produce the signature. If one exists, the bank eats the cost; if not, the merchant does.
That all makes sense… except no one ever checks the signature. For pretty much my entire adult life, I’ve signed things with smiley faces or even written VOID in all caps. I have never had the signature questioned, much less compared to the one on my card. Caveat: this is true in America. Overseas, I’ve had the signature checked.
So we all — merchants and customers — engage in this meaningless ritual. How much does this pointless custom cost? Let’s do the math!
Let’s assume each signature takes 15 seconds, from waiting for the receipt to print, passing it back and forth, doing the signature, and putting the receipt away.
And let’s also assume the customer and cashier both make an average american wage of $25. 15 seconds is 1 / 240 of an hour, which costs roughly 20 cents.
So we get 20,000,000,000 billion transactions * 76 percent * 20 cents = about $3 billion per year.
This number is conservative in that it doesn’t account for the time wasted by everyone else in line, plus the cost of the receipt paper, plus the cost of storing the receipts.
So we could save a few billion dollars if credit card agencies would change their charge back policy around card present transactions.