As final EMV deadline nears, gas stations get inventive
After getting a reprieve from a 2017 deadline, gas stations now have less than a year to upgrade to EMV security at the pump — and the card brands aren't showing signs that they will be willing to postpone this mandate another time.
The earlier deadline was already an extension from the 2015 date given to other retail categories in the U.S. The card networks indicated that the more generous deadline was due to the complexity of upgrading fuel pumps, a task that in some cases requires ripping them out of the concrete.
One benefit to this delayed deadline, now set for October 2020, is that technology has advanced far beyond what was possible in 2015 or earlier.
Mobile payments got a good look in 2015 at a time in which mainstream mobile acceptance was still in its early stages. Similarly, voice-directed payments — which are still in pilot in most cases — are seen as a way to ease the pain of an onerous network-wide project.
“These voice transactions use the same rails as the rewards app, which is EMV compliant,” said Devin Miller, consumer marketing manager for ExxonMobil. “So the pump may not take chip cards but can take e-commerce transactions in the cloud as an alternative.”
ExxonMobil will make Alexa voice payments available to its network of about 11,500 gas stations this year. The chain wants to add more payment options to bring the gas payment experience in line with e-commerce transactions for other categories.
Another potential benefit will be easing the EMV migration for gas stations. Like the EMV migration at other merchants about six years ago, the deadline will shift fraud liability to merchants.
And like a sequel to that earlier EMV shift, many merchants won’t be ready and are looking for digital alternatives that remove the plastic payment card from the transaction.
Almost 70% of gas stations had zero compliant fuel islands as of August 2019, according to Conexxus. Another 9% said their rollout was less than 25% complete. The delays are partly due to the complex upgrades — most gas pumps either don’t have the bandwidth to support EMV transactions, or separate systems handle fueling and payments.
That means the actual gas dispensing system will have to be rebuilt in some cases. Gas merchants have lobbied the card brands for the last several years to delay the October 2020 liability shift. It’s the sort of plea that has worked for security upgrades in other parts of the world. European regulators have extended tougher authentication standards because huge chunks of the financial services and merchant industries were not ready.
But for the U.S. gas station EMV upgrade, Visa and Mastercard have not budged, and last week rejected a request for a delay beyond October.
That has turned attention to other security methods, which will be necessary as more payments move to mobile, voice, or the internet of things. “Voice will not replace EMV for our merchants, but those that may fall short of the deadline have some options to avoid the liability shift,” Miller said.
Shell recently introduced an app that allows consumers to find Shell locations, pay for fuel through the app and access Shell's incentive program. Shell hopes to lure consumers to digital payments through lower cost while easing the EMV migration.
Other gas station brands, such as Chevron, have entered into partnerships to expand NFC to support contactless payments.
And vendors that supply gas stations have developed workarounds such as alternative data transmission that's designed to eliminate the need for complex rewiring at pumps, or multimedia pumps that add new revenue streams.
The alternatives can help gas stations combat payment crime, though the chip card migration will still play the primary role.
“The Alexa and Exxon solution clearly overcomes [skimming vulnerability],” said Thad Peterson, a senior analyst at Aite Group. “The challenge is that even if the program is really successful, it will still be a reasonably small percentage of total transactions.”
The best way to combat skimming in petroleum forecourts is to replace mag-stripe readers with chip readers, and secondarily, contactless cards and mobile wallets, Peterson said. “Mobile and in-car payments will be a nice addition and will grow, but won’t be a significant part of the mix for several years.”