Most U.S. merchants faced a 2015 deadline for EMV compliance, but gas stations have until 2020. Those extra years bring with them an assortment of new technology that can fundamentally change the ways motorists fuel up.
At least that's what gas station executive Eric Bunts hopes will happen. Bunts is the CIO at Mirabito, a gas station chain that's an early adopter of "outdoor EMV" for its gas pumps.
Mirabito has migrated three of its locations in upstate New York. It has a total of 108 locations, which average 6 gas pumps per store. It didn't give a timeline for its complete migration, though the gas chain hopes it's retrofitting its pumps in a manner that minimizes the work required to change pumps from magnetic stripe to EMV. It's using Optic, an NCR gas terminal add on that's designed to work across different pump manufacturers and different pump ages, with an open software model for remote updates.
"It's adaptable to legacy hardware and that's a benefit since I'm running 40-year old pumps in some cases," Bunts said. "So you want to be able to retrofit them and breathe life into old hardware."
There's also more awareness of mobile contactless payments. Mirabito will start accepting contactless mobile payments next month at its gas pumps, and again hopes to benefit from consumers using apps such as Apple Pay at other stores. "We've already seen people try to hold up their mobile phones to try to pay at the pumps and we don't even have the Apple Pay sign on the pumps yet." Bunts said.
Mirabito will offer marketing and rewards programs though an integrated bar code scanner. That opens the possibility of wringing more revenue out of the pumps since they can run advertisements and targeted messaging through the open development tools that accompany the EMV migration software, according to Bunts.
Since other merchant categories have completed their EMV migrations, consumers are largely familiar with how chip-card terminals operate. Still, customers are not accustomed to this process at gas pumps, Bunts notes.
"We anticipate a learning curve, stuff like leaving cards in the pump and leaving... since it's really only been a few weeks since we started deploying at the pumps," Bunts said. "But there's such an awareness of cybersecurity and theft and certainly a marketing push for chip cards in general now."
Gas stations are the next and generally final merchant category to move from magnetic swipe to EMV chip cards in the U.S., with a card network-imposed liability shift that was delayed to 2020 (from an original date of 2017) to accommodate the logistics of the turnover. For example, updating gas pumps for EMV may require digging up concrete to replace older wiring.
The first EMV migration at general retailers took years to execute, and still isn't complete. The turnover was fraught with concerns over fraud and required card network EMV workarounds to make the transition from swiping to dipping appear smoother for consumers and merchants.
"Fuel pumps are much more challenging to upgrade because of the complex set of equipment that must be opened up, which just happens to be connected to thousands of gallons of highly flammable liquid," said Julie Conroy, a research director at Aite Group, adding one petrol firm told her the cost of an EMV upgrade would be $200 million. "This expense and complexity is why we've seen the liability shift be at a later date for many of the countries that have moved to EMV."
Bunts didn't give an exact cost of Mirabito's EMV migration but said updating six pumps per store over 108 stores could be a seven-figure initiative. Using a product that updates existing pumps is helpful, as is the accompanying digital payments and marketing migration.
"The store controls the messaging and can deliver its own content," said Jason Nichols, general manager for NCR’s Outdoor Transformation Solutions. The personalized e-commerce style marketing can drive traffic from the pumps to the accompanying convenience stores, Nichols said.
The overall EMV migration at gas stations has gotten off to a slow start, with Gilbarco Veeder-Root announcing its first pump deployment in the summer of 2017. Convenience chains — not oil companies — own most of the gas pumps in the U.S., creating a tricky EMV migration since point of sale suppliers have to sell to multiple owners rather than a few large companies.
NCR is working with multiple gas retailers, though Nichols said some are waiting a bit longer to deploy EMV. "We saw that with the first migration. There was an initial push of activity, then a two-year window, then a hockey stick curve," he said. "I foresee that in this case as well."
There's also a compelling security argument to migrate to EMV, since adopting chip cards will allow gas stations to shed the magnetic stripe terminals that are prone to skimming attacks.
"The migration to EMV at the pump closes another door for criminals," said Al Pascual, senior vice president of research and head of fraud and security for Javelin Strategy & Research. "Merchant segments that had yet to broadly migrate to EMV have made attractive breach targets for the last few years."