As unattended devices, gas pumps would perhaps benefit most from EMV's anti-counterfeiting 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. Last week, Gilbarco Veeder-Root 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 security-conscious 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.
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 and lost and stolen 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 security-conscious 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.”
Is mobile an alternative or an 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 connected-car solutions as growth areas for the industry, we don’t see them obviating the need for EMV,” Williams said.
As with the POS transition to EMV, gas pump upgrades may also benefit from similar future proofing. “We have seen a very large increase in the percentage of our EMV dispensers that ship with NFC readers as retailers think through how to leverage their EMV investments to future-proof their operations and provide more flexibility to their end customers," Williams said.