Fuel retailers may shudder at the potential costs of upgrading gas pumps for EMV chip-based card acceptance, but they are a prime target for vendors offering mobile payments and deeper fraud-screening analytics.
Gas station owners have until October 2017 to be EMV compliant or face a liability shift in fraud costs. That's two years longer than other companies, which have until October 2015. During that gap, gas stations may choose to adopt other new payment technology to reduce fraud before EMV takes hold.
P97 Networks announced a partnership with Zipline to operate decoupled debit, a popular option for gas stations, through P97's mobile commerce and marketing platform. In a similar vein, Sionic and Pinnacle are pushing the use of beacons at gas pumps to send promotional messages to customers' mobile devices, encouraging more spending at the station.
"Everyone will have to upgrade to EMV at some point in time because they don't want the liability, but mobile in itself creates a much safer environment," said Don Frieden, president and CEO of P97 Networks.
P97 offers fuel retailers the mobile wallet-agnostic PetroZone mobile commerce platform, which utilizes a cloud-based token vault to hold encrypted data when a customer is using a mobile phone to pay for gasoline. P97 provides the white-label app for oil or marketing companies to brand. PetroZone represents a viable option for station owners not able to absorb the expense of EMV pump upgrades that have been estimated to average about $3,000 a pump, Frieden said.
"The stations will upgrade to EMV because they don't want to leave any customers behind, but our hypothesis is that they may just upgrade a few pumps, or one side of the pump line, making one row for EMV payments," Frieden said. "The other pumps would be for mobile payments or cash, but you could give incentives to use mobile."
PetroZone users submit a four-digit passcode to enter the app, then enter the code again at the pump's PIN pad when prompted to begin fueling.
P97 is testing PetroZone and will announce clients and an official launch in the coming weeks and months, Frieden added.
VeriFone Systems Inc. last week unveiled RubyCi, a site controller and point-of-sale software for average-sized convenience stores and petroleum dealers. RubyCi is designed to manage various aspects of the fueling business, while also readying the stations for EMV upgrades. RubyCi combines aspects of the site controller and POS system that larger convenience stores and gas stations use, allowing smaller operations to be EMV ready while carrying out loyalty programs and general station operations.
In the meantime, Visa Inc. is reminding station operators that its Visa Transaction Advisor, operating through the VisaNet network, provides fraud prevention analytics at the gas pumps to decrease fraud incidents even before an EMV upgrade ever takes place.
The transaction advisor can "complement EMV" as a bridging technology to the chip-based smart cards, said Mark Nelsen, vice president of risk products and business intelligence.
"We definitely recognize that it is going to take a little more time for the gas stations to upgrade to EMV technology, so this gives them additional intelligence as well as an ongoing measure when they do upgrade," Nelsen said.
Obtained through an acquirer, Visa Transaction Advisor does not call for any hardware or software infrastructure changes on the station's network. "The service is part of the normal authorization request they send in with transactions today," Nelsen said.
The analytics tool looks over "500 pieces of data in milliseconds" that includes Visa's global view of fraud data and trends in authorizing or flagging transactions at the pumps, Nelsen added.
Chevron Corp. tested the system at 300 of its stations for two months and enjoyed a 23% reduction in fraud expenses, said Chevron spokesperson Braden Redall.
"There were no costly infrastructure upgrades or disruption to our customer experience, which was really important to us," Redall said. As a result of the successful tests, Chevron now uses the analytics tool in about 8,000 stations across the country.
Though it is not really a part of Chevron's overall EMV strategy, Redall acknowledges, "It is a great technology for the system that we currently have."
Visa realizes that the transaction advisor could allow some station operators to wait even longer to convert to EMV, but that is not entirely a bad thing, Nelsen said.
"Even in Canada, which has had EMV for years, there are still merchants who don't have chip terminals," Nelsen said. "We see the same thing happening in the U.S. in low-risk fraud areas if they don't have a fraud problem and their terminal still works."
The transaction advisor "gives them additional tools and intelligence to help make that EMV decision without being negatively affected from a fraud perspective," Nelsen added.
Some are not ruling out the possibility that EMV could pass by the fuel retailers altogether. "I think it makes sense for a petroleum retailer to engage in mobile and forget cards at the pump," said Bill Deichler, payments industry expert and former payments manager for Murphy USA oil company.
Some mobile solutions at the pump could even carry the less expensive card-present rates in the future because of tokenization and encryption methods, Deichler said.
With three years left before the EMV liability shift hits, fuel operators may "get to the point where they might even pull the swiper out of the pumps by 2017 and go only mobile and cash," Deichler added.