Gas pumps won’t be chip-ready un­til 2020

The Denver Post - - BUSINESS -

Visa Inc. and Mastercard Inc. pushed back the dead­line for in­stalling chip­card read­ers in U.S. gaso­line pumps af­ter sta­tion own­ers com­plained they didn’t have enough time to com­plete the multi­bil­lion-dol­lar up­grades.

The world’s largest pay­ments net­works will give mer­chants un­til Oc­to­ber 2020 to adopt the tech­nol­ogy, three years later than pre­vi­ously planned, the com­pa­nies said Thurs­day in sep­a­rate state­ments. Visa said it will mon­i­tor pay­ment trends at the pump to help gassta­tion op­er­a­tors and card-is­su­ing banks pre­vent fraud dur­ing the in­terim pe­riod.

“In some cases, older pumps may need to be re­placed be­fore adding chip read­ers, re­quir­ing spe­cial­ized ven­dors and break­ing into con­crete,” San Fran­cisco-based Visa said in a state­ment on its web­site. Suf­fi­cient sup­plies of com­pli­ant hard­ware and soft­ware to en­able up­grades by 2017 re­main an is­sue, the com­pany said.

Sta­tion op­er­a­tors will spend al­most $30,000 per store to re­place the pay­ment sys­tems at pumps, bring­ing the to­tal cost for the in­dus­try to about $4 bil­lion, data com­piled by the Na­tional As­so­ci­a­tion of Con­ve­nience Stores show. Card fraud costs the in­dus­try $250 mil­lion a year, ac­cord­ing to Conexxus, a firm that pro­vides tech­nol­ogy stan­dards for con­ve­nience stores and gas sta­tions.

Visa and Mastercard have been push­ing for a mi­gra­tion to chip read­ers to head off coun­ter­feit cards. The tech­nol­ogy — named EMV for founders Euro­pay, Mastercard and Visa — gen­er­ates new codes for each trans­ac­tion, while the codes on mag­netic stripes are per­ma­nent and can be copied and stored by hack­ers for later use.

“It is a pri­or­ity for Mastercard to en­sure con­sumers can con­fi­dently shop any­where, any time,” the Pur­chase, New York-based com­pany said in an emailed state­ment. “We will be work­ing closely with our fuel part­ners, sta­tion own­ers, in­dus­try as­so­ci­a­tions and third-party ven­dors to en­sure a smooth tran­si­tion to EMV.”

Banks are cur­rently re­spon­si­ble for cov­er­ing any fraud that hap­pens on con­sumers’ cards at gas pumps. Af­ter Visa’s dead­line, the li­a­bil­ity for cov­er­ing that fraud shifts to gas sta­tion op­er­a­tors for those that haven’t up­graded their ter­mi­nals in time.

An­a­lysts in­clud­ing SunTrust Robin­son Humphrey’s An­drew Jeffrey said

the de­lay could af­fect the shares of com­pa­nies that pro­vide such tech­nol­ogy, in­clud­ing Ver­iFone Sys­tems Inc., which fell 3.9 per­cent to $16.23 at 11:18 a.m. in New York, the most since Septem­ber.

The de­ci­sion to de­lay the dead­line is the sec­ond time in a month that Visa has an­nounced moves to ap­pease mer­chants af­ter years of tense re­la­tions be­tween the two groups fueled by ar­gu­ments over fees. Last week, the firm said it would re­vise its rules for us­ing the new chip tech­nol­ogy for deb­it­card transactions af­ter some re­tail­ers claimed the re­quire­ments in­hib­ited com­pe­ti­tion.

“While we re­main com­mit­ted to mov­ing busi­nesses to chip tech­nol­ogy as quickly as pos­si­ble, we are also con­stantly mon­i­tor­ing in­dus­try progress and at­tempt­ing to proac­tively ad­dress mar­ket­place re­al­i­ties,” Visa said on its web­site. “We be­lieve we have reached a bal­anced con­clu­sion for pro­vid­ing needed, ad­di­tional time to mer­chants while con­tin­u­ing to push for­ward with the mi­gra­tion to chip.”

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