Gas stations have had a complicated relationship with mobile wallets. Pump hardware is notoriously difficult to upgrade, and besides that, many consumers believe that it's a fire hazard to use their phones while fueling up.
But some gas stations are finally breaking through these roadblocks to modernize the way they accept payments.
Visa and Chevron sent a signal in that direction this week in announcing a partnership that brings Near Field Communication-based contactless payments to more than 20 stations in the San Francisco and Silicon Valley region.
It means the pumps will accept the Apple Pay, Android Pay and Samsung Pay wallets, while securing transactions with Visa Token Services that convert card data into a unique set of characters for each transaction.
At the same time, Verifone revealed it will integrate the P97 Networks Inc. PetroZone mobile commerce and digital marketing platform into its cloud-based point of sale and site management software. PetroZone provides geolocation-based mobile payments as well as digital coupon offers and customer rewards programs.
Gas stations also use mobile apps to send updates on gas prices or other special offers.
P97 Networks CEO Donald Frieden said his company is currently under contract with five oil companies in the testing and certification phase with the Verifone Mobile API, with plans to deploy the technology this year.
Developments like these have been advancing payments technology at the pump for the past year or more. In other words, a lot is happening at the gas pump that doesn't necessarily have anything to do with the nationwide shift to EMV cards, which many have described as a catalyst for mobile wallet acceptance. Gas stations even have a different deadline for EMV adoption; while most companies were given until Oct. 1 of this year to support EMV security, gas stations have until Oct. 1, 2017 (the consequence of missing the deadline is a shift in fraud liability).
"With approximately 1.3 million fuel dispensers in the U.S. that will have to retrofit the new hardware in order to support EMV card readers or NFC contactless payment readers, it is unlikely that merchants will have time to upgrade their sites," Frieden said.
As such, geolocation-based mobile payments that do not require modifications at the pump are likely to be more attractive to merchants than contactless Near Field Communication-based systems like Apple Pay, which require special hardware, Frieden said.
Fuel pump manufacturers are concerned about what they need to incorporate into the pump because of the swarm of technologies coming to market, said Maria Arminio, president of Avenue B Consulting Inc., a Redondo Beach, Calif.-based payments management consulting firm, who has worked with fuel companies and equipment manufacturers.
"There is NFC, QR codes or Bluetooth capabilities, let alone [EMV] chip cards," Arminio said. "The chip cards are particularly problematic because they are so expensive to retrofit, with costs of up to $4,000 a pump."
Most fuel companies will progress with contactless mobile payments "before they worry about the chip technology," Arminio added.
Some gas stations are upgrading what systems they can to EMV, even if this means a different experience when paying inside compared to paying at the pump.
“Right now, Chevron is focused on helping our station partners and marketers enable the inside POS for the liability shift that occurred on Oct. 1," said Doris Lee, head of loyalty at Chevron.
Lee didn't commit to an EMV move at the Chevron pumps, but noted the company's partnership with Visa shows it is committed to supporting NFC phones.
"Rolling out mobile payments at the pump in 20 stations through this [Visa] program is helpful as we develop plans for the 2017 deadline for transitioning outdoor sites," Lee said.
A year ago, the National Association of Convenience Stores reported that the average card fraud costs at fuel pumps at each store was about $700 a year, compared to the cost of complying with the Payment Card Industry security standards going up about $2,000 a year.
That sort of math has led an entire industry to approach EMV upgrades cautiously, while being far more open to alternative payment options that provide more security but at far less cost.
But not all fuel companies intend to rush to NFC pay at the pump.
Shell Oil, for one, is "going to work really hard to make the date" on the EMV 2017 timeline for its pumps, said Chris Suess, Shell's general manager of payments in North America.
"But there is plenty out of our control," he added, such as equipment, suppliers and standards. At the same time, Shell has not committed to NFC or other contactless payment methods in lieu of chip cards at this time, Suess said.
By contrast, Chevron has hinted at an interest in accepting Apple Pay since late last year, saying at that time its customers could see the mobile pay method at pumps in early 2015.
At that time, the San Francisco Chronicle was quick to dispel another potential stumbling block for mobile payment at the pump — fears that mobile phones could cause fires from static electricity sparks at the pump. Essentially, the vision of a gas pump exploding because someone is chatting with a friend while fueling a car is stuff of urban legend.
This myth was even perpetuated by major fuel sellers like ExxonMobil, which until mid-2013 had decals on its pumps to warn motorists against cell phone use. ExxonMobil began taking down those warnings to encourage the use of its SpeedPass+ mobile payment app.
Multiple independent research studies, including wireless industry research cited by the FCC, have concluded there is no reason to prohibit consumers from using their mobile devices to pay at the pump, said Chevron spokesperson Braden Reddall.
"These studies say there has been no documented incident where the use of a wireless phone was found to cause a fire or explosion at a gas station," Reddall said.
The FCC does advise motorists to follow the rules at individual gas stations and acknowledges the remote potential of some sort of static electricity helping to spark rumors about cell phone combustion.
Still, the fear of mobile phones and combustion is problematic because some states continue to ban cell phone use at stations and many consumers still believe it is an issue, Avenue B's Arminio said.
"At a recent conference, I heard petroleum industry executives saying they still have issues with this perception," Arminio said. "But overall, I don't think it is going to be an issue of whether a consumer is willing to use the phone at the pump. The primary concern will be the experience, on whether it is convenient or cumbersome."
Evan Schuman contributed to this story.