Credit card myth: Showing ID at the register

Privacy or security?  Which is more valuable?  Credit card holders have differing viewpoints.

If retailers ask customers to show proof of identity when presented with a credit card for payment, it’s more difficult for a stranger to use stolen cards.  However presenting ID often means also presenting address, birth date, and sometimes even social security number.  That loss of privacy has a parallel risk of security loss.

The Rules

The contract between the credit card processor and the vendor states the rules.  The three major credit cards – Visa, MasterCard and Discover Card – have similar requirements for their vendors.  Whenever a card is presented for in-person payment, the vendor must compare the signature required for the transaction to the signature on the back of the card, sometimes subject to certain transaction minimums.  If these signatures do not match, or there is no signature on the back of the card, then the vendor may ask for identification. 

In some cases the authorization may require identification before the transaction will be allowed.  This happens when a credit card has been reported stolen or the credit card company suspects unauthorized use.  In any other case, if a retailer denies purchase to a cardholder just because they refuse to show I.D., then that retailer is in violation of their credit card contract.

Discover is the only one of the three that recommends requesting identification as a “best practice,” but they don’t require it. 

The Logic

These rules exist to strike a balance between security and convenience.  Yes, it would be much more secure if identification were demanded with each credit card transaction.  However it would be impractical.  Lines at the cash register would be longer and customers would blame the store for the wait.

That’s why the signature on the card is so important.  This simple comparison can be done by an untrained individual with fair accuracy.  The real problem is that this check isn’t done consistently or conscientiously.  If it were, many, many more stolen cards would be stopped right at the register.

If a credit card thief has really practiced to perfect a signature that is not his own, it will probably get by this loose examination.  However, most credit card thieves will never go to this much trouble, knowing stolen credit cards have a very short shelf life.  As soon as they’re reported stolen, they’re useless.

Non-Credit Cards

With debit cards there is no credit involved.  Money is taken directly from a bank account or an amount set aside in some other manner to be used only when this card is presented for payment.  As such, debit cards fall under different rules and may or may not require presentation of identification at the time of sale.

American Express, too, is not a credit card, because the entire balance is due each month.  There is no revolving option.  Therefore, it also has its own set of rules.  Currently, American Express cardholders are not required to present I.D. when using their card.

Whether you value your privacy or security more, the credit card rules are there to protect both you and your favorite merchants.  Sign your cards, keep them in a safe place, and never knowingly allow others to use them.