One EMV Gas Pump Down, 1.4 Mil­lion to Go

Gil­barco Veeder-root re­cently an­nounced the first EMV gas pump trans­ac­tion in the U.S. It’s progress, but there is still a long road ahead.

ISO & Agent - - INSIDE 09/10.2017 - BY NICK HOL­LAND

Gil­barco Veeder-root has en­abled its first EMV gas pump pay­ment. It’s a note­wor­thy mile­stone, but there’s still a very long road ahead.

As unat­tended de­vices, gas pumps would per­haps ben­e­fit most from EMV’S an­ti­coun­ter­feit­ing tech. They have also been among the most dif­fi­cult to up­grade, prompt­ing the card net­works to give gas sta­tions ex­tra years to get EMV com­pli­ant.

But there is progress. Gil­barco Veeder-root re­cently an­nounced what it says is the first EMV gas pump trans­ac­tion to be suc­cess­fully pro­cessed in the U.S. at a 49 Fu­els site in North Carolina. This is wel­come news, but is it a sign that the rest of the fuel in­dus­try is close to adopt­ing EMV?

Many gas sta­tions have the proper hard­ware in place, but an EMV im­ple­men­ta­tion also re­quires soft­ware in­te­gra­tion, cer­ti­fi­ca­tion with card net­works, and test­ing be­fore a lo­ca­tion can be­gin ac­cept­ing chip-card pay­ments.

Gil­barco ex­pects gas pump EMV pay­ments to quickly be­gin turn­ing on across the coun­try at the in­stalled base of Fl­ex­pay Card Read­ers in Dis­pensers (CRINDS) as the soft­ware is re­leased for pay­ment net­works through­out the year, and as fraud mi­grates to less se­cure pay­ment points and se­cu­ri­ty­con­scious mo­torists go to those sites with en­hanced se­cu­rity.

“Our cus­tomers are look­ing to en­able EMV at the dis­penser as soon as pos­si­ble, to pro­vide the se­cu­rity their cus­tomers ex­pect of them, and to get the most of the fore­court EMV hard­ware in­vest­ments they’ve al­ready made,” said Mark Wil­liams, Vice Pres­i­dent of Mar­ket­ing, Gil­barco Veeder-root.

How­ever, with the man­date for EMV readi­ness at the pump shifted out from 2017 to 2020 and a plethora of newer tech­nolo­gies com­ing of age, the pos­si­bil­ity arises for oil com­pa­nies to steer to­wards more mod­ern and con­sid­er­ably less ex­pen­sive al­ter­na­tives.

Sticker shock

That gas sta­tions have been re­luc­tant to move from mag stripe to chip is hardly sur­pris­ing. In 2014, the cost of up­grad­ing an in­di­vid­ual pump to EMV readi­ness was es­ti­mated to be be­tween $6,000 and $10,000. With a fore­cast 143,000 gas sta­tions in the US to­day and an av­er­age of ten pumps per lo­ca­tion, the price tag for the tran­si­tion to EMV at the pump to­day is in the re­gion of $11 bil­lion to con­vert over 1.4 mil­lion pumps.

On the flip­side, with card fraud be­ing squeezed out at the phys­i­cal point of sale due to EMV, unat­tended gas pumps are an easy tar­get for coun­ter­feit cards and there are clear pat­terns of mi­gra­tion. There have been some band-aids to the prob­lem, such as the in­tro­duc­tion of Visa Trans­ac­tion Ad­vi­sor (VTA) at gas pumps last year which was shown to to re­duce fraud charge­back rates by 51% and coun­ter­feit fraud rates by 54%.

How­ever, un­til mag stripe read­ers are ripped out and re­placed at the pump — a process that may re­quire rip­ping out and re­plac­ing the pump it­self — the low hang­ing fruit for card fraud will re­main. Wil­liams sees this as the pri­mary mo­ti­va­tion for the tran­si­tion.

“We con­tinue to hear from many re­tail­ers that their con­sumers’ ex­pec­ta­tions around be­ing able to pay with their chip card con­tinue to in­crease, and re­tail­ers don’t want to lose se­cu­ri­ty­con­scious cus­tomers to com­peti­tors who en­able EMV at the dis­penser be­fore they do,” Wil­liams said. “Ad­di­tion­ally, as we’ve seen in other re­gions, re­tail­ers un­der­stand that fraud will shift to the least se­cure sites. These fac­tors will drive con­tin­ued adop­tion of EMV tech­nol­ogy at the dis­penser as the 25% to 30% of the mar­ket that al­ready has EMV ca­pa­ble dis­pensers be­gin to ‘turn on’ EMV with the soft­ware avail­abil­ity.”

Mo­bile: Al­ter­na­tive or add-on?

None­the­less, the cost / ben­e­fit anal­y­sis of EMV at the pump re­mains prob­lem­atic for gas re­tail­ers.

Con­se­quently, oil com­pa­nies, au­to­mo­tive man­u­fac­tur­ers and pay­ment net­works have been work­ing to find al­ter­na­tives that could not only re­duce costs but pro­vide a more con­ve­nient ex­pe­ri­ence for the mo­torist and greater loy­alty for the mer­chant. The cur­rent it­er­a­tion of Exxon­mo­bil’s Speed­pass+ is a prime ex­am­ple of a mo­bile app that in­ter­acts with gas sta­tion equip­ment via ge­olo­ca­tion tech­nol­ogy.

Pay­ments are made di­rectly in the app rather than at the pump, ac­cord­ing to Bryant Rus­sell, Exxon­mo­bil’s U.S. pro­gram man­ager for mo­bile pay­ment and loy­alty. “There’s no change from a hard­ware point of view,” Rus­sell said.

While mo­bile may aug­ment and to some ex­tent re­place the need for card trans­ac­tions at the pump, this doesn’t equate to an EMV get-out-of-jail-free card, ac­cord­ing to Gil­barco’s Wil­liams.

“While we see mo­bile and con­nect­ed­car so­lu­tions as growth ar­eas for the in­dus­try, we don’t see them ob­vi­at­ing the need for EMV,” Wil­liams said.

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