While the current phase of the U.S. chip card migration is still far from the finish line, attention is turning to the 'next' EMV migration at gas stations, which figures to be just as challenging.
At Verifone, EMV is just part of the vendor's strategy to sell gas stations and the corresponding convenience stores on a broad-based tech upgrades. Verifone in the past couple of weeks has inked several partnerships that bring EMV compliance, expedited upgrades, video content, advertising and even lottery tickets to the gas pump.
Much like the October 2015 liability shift "deadline" for non-fuel retailers was seen as a chance to bake contactless mobile payments into a chip card migration, some of the same thinking is going toward the October 2017 liability shift deadline for fuel stations.
"EMV is certainly a driver, but there's also tech that allows for better communication and instruction to customers, with better screens and sound, and contactless payments like Apple Pay and others," said Dan Yienger, senior vice president of global petroleum for Verifone.
Verifone and gas terminal manufacturer Gilbarco Veeder-Root this month announced a collaboration on an EMV-certified dispenser called FlexPay IV. The terminals also support NFC, mobile wallets and 2D barcode scanning. Additionally, there's a display including news and entertainment content from Gilbarco’s Applause TV powered by Pump Media.
Video content at gas pumps has long been seen as a way to offset the cost of the EMV migration, which is considerable for gas stations because the pumps require a more complicated upgrade than in-store terminals do. The video content is also designed to drive consumers into the stores next to the pumps.
"You can deliver messaging at the [fueling] island about a deal on water or beef jerky that’s a hundred feet away in the store," Yienger said, adding the sale of packaged goods is where the gas stations make the most profits, and poses a challenges since nearly three quarters of gas is now purchased directly at the fuel pumps. "The holy grail is getting someone to go into the store at a higher margin."
Verifone has also certified its Commander Site Controller—a convenience store and gas station management system that expedites updates for payment acceptance, fueling operations and back office control—with First Data's Rapid Connect, which hastens EMV acceptance. The move is designed to simplify and expedite the in-store EMV upgrades at convenience markets while the outdoor dispensers undergo the more complicated updates in the long term.
The 2015 EMV liability shift applies to in-store electronic payments at all merchants, including convenience stores, while the 2017 deadline applies to outdoor dispensers, said James Hervey, Verifone's director of product management for petroleum.
Verifone's collaboration with Linq3, also announced this month, enables lottery sales at the gas pump. Consumers buy the lottery tickets at the fuel dispenser, a process that takes about 20 seconds. The lottery numbers and win notifications are send to the payer's mobile phone.
While most of the EMV acceptance challenges at non fuel merchants will likely have been resolved by October 2017, the cost to upgrade, which is about $5,000 per pump, will still pose a problem, according to Tim Sloane, vice president of innovation at Mercator Advisory Group.
"Alternative approaches might include improved authentication, such as asking the cardholder to enter the billing ZIP code, using sophisticated analytics to detect fraud, an increased reliance on mobile or cash or most likely a combination of approaches," Sloane said, adding high volume 24-hour locations will almost certainly need to support EMV.
"Dodging the need for EMV might introduce interesting new pricing variations," Sloane said. "Some stations might keep the existing card readers and charge a premium to cover potential losses. Other might eliminate cards and go to cash while making an ATM available…While the large chains are likely to bite the bullet and install EMV capable pumps, I suspect it will be a more dynamic environment at the mom and pop shops."