By Pat Pape, Contributing Editor
Citing technological and regulatory challenges, Visa, MasterCard and American Express recently announced that the U.S. deadline for installing EMV (Europay, MasterCard and Visa) chip-card readers at automated fuel pumps has been extended to Oct.1, 2020 from Oct. 1, 2017.
More than 1.7 million merchants—or about one-third of all U.S. stores—now accept chip cards, and the nation has already seen a 43% reduction in counterfeit-card fraud among merchants using chip technology, according to Visa. However, selling fuel comes with a complex set of challenges, and gasoline retailers need more time to make the mandated upgrades.
Companies now have three more years to migrate from traditional magnetic stripe-based payment card scanners to chip readers before they would incur any financial liability for fraud perpetrated at the point of sale (POS).
But preparing gas pumps to be EMV compliant is more difficult and costly than updating an in-store POS. While many existing fuel dispensers will be eligible for EMV-ready retrofit kits, some older fuel pumps will need to be replaced before chip readers can be installed.
Even five years after announcing the EMV liability shift, there are issues regarding a sufficient supply of EMV-compliant hardware and software, as well as enough professional installers, to ensure a majority of upgrades are completed by October 2017.
“The card brands have come to understand that these challenges are not of retailer creation, but a result of late specifications, certification complexity and supply chain constraints, rather than a lack of resolve to adopt EMV,” Gray Taylor, executive director of Conexxus, told news outlets recently.
Conexxus is a non-profit, technology organization based in Alexandria, Va., dedicated to standards and innovation for the convenience store and petroleum markets.
“We are still sifting through the details…We don’t see this announcement as a true game delay, but a bit of breathing room to work out the challenges,” Taylor said.
Other finance and technology insiders have publicly stated that the extended liability deadline comes as no surprise since EMV has required about a decade for complete implementation in most parts of the world.
FUEL PUMP THEFT
The deadline postponement doesn’t mean that gas station owners can take a vacation from their EMV upgrade plans. In fact, fuel retailers using the traditional, magnetic-stripe card readers could become liable for fraud losses even before the new deadline if their credit-card fraud increases beyond a certain level.
Currently, fuel-pump credit-card fraud is relatively low, making up an estimated 1.3% of all U.S. payment fraud. A number of available fraud prevention tools, have helped curb fraud activities at fuel dispensers, Visa reported, including the Visa Transaction Advisor (VTA).
In seconds, VTA analyzes nearly 500 pieces of data, such as past transaction history, to create a risk score and either approve the fuel sale or ask the customer to complete the transaction inside the store. According to Visa research, fraudsters asked to go into the store to finalize a sale will typically drive away instead.
BUSINESS AS USUAL
The new deadline may take the immediate pressure off retail fuel merchants that have been scrambling to develop a new EMV payment system and locate the necessary hardware and software to meet the mandates. But for many more, it will be business as usual as they work to wrap up their existing plans for compliance.
One of those retailers is Rutter’s Farms Stores of York, Pa. “We already have our plans in place, and this announcement really doesn’t impact us, said Derek Gaskins, chief customer officer for Rutter’s.
Recently, Rutter’s announced that it is using the mandatory EMV update as an opportunity to update other features of the fuel dispensers at its 66 convenience locations throughout Pennsylvania. The company plans to retrofit the fuel pumps with NCR’s Optic outdoor payment solution, which features a large touchscreen, an EMV-compliant payment terminal and 2-D barcode scanner.
Not only will the new system accept EMV payments, Gaskins said, it can read magnetic-stripe cards, mobile phones and mobile wallets. The system also features new media capabilities, such as full-motion video, which allows the chain to promote in-store products and services to customers at the gas pumps. Rutter’s also plans to integrate its VIP Club rewards program into the retail system.