Gas EMV migration is leaving merchants holding the bag
Merchants in the Automated Fuel Dispenser (AFD) arena must have EMV compliant solutions in place by October of 2020 or they will bear the liability of fraudulent transactions that take place at the pump.
Some claim retailers are dragging their feet in updating their systems to be compliant with chip cards. This is not the full story. Merchants feel it is imperative that stakeholders collaborate to meet the deadline the card networks set forth.
The networks will not delay the liability shift date, despite the fact the U.S. fuel retailing ecosystem is more complex than any other country, and industry stakeholders recognize that solutions came to the market late. The MAG asked all the network brands for a delay, and they responded with a clear message that no further postponements are forthcoming.
In 2015, the rest of the retail industry was subject to EMV chip liability shift and migration to chip payments technology at the point of sale; however, retail fuel is still working aggressively towards EMV acceptance outdoors at the AFD. Years ago, the global card networks acknowledged the AFD market required more time and extended the activation date to October 2020, three years past the original mandate of October 2017.
Unfortunately, there is no intermediary deadline which also required all the third-party providers within the payments ecosystem to create solutions in order for the merchant to prevent the liability shift. There are still configurations of pumps, payment terminals, and POS systems that lack developed, implementable EMV chip solutions for the merchant. Merchants with these solutions that are not ready to support EMV chip have no way to meet the liability shift date, no matter how hard they try. There are also many more merchants who have EMV-ready solutions, but they must each go through coding, testing, and certification in order to implement the solution by the deadline.
Fuel merchants that fail to migrate to chip technology at the AFD on time will be at risk of sharing the $450 million in counterfeit fraud projected to hit the industry in 2020. This staggering hit could take place even if those merchants have not experienced counterfeit fraud in the past. In many cases this stands to increase the cost of payments acceptance to an amount greater than the station owner is making selling fuel and may cause some operators to simply close down.
While innovative solutions such as in-app, voice or in-car payments may create an enhanced customer experience at the pumps, they will do nothing to soften the blow of fuel marketers' EMV liability shift. Liability for these types of transactions, or any transaction which is considered by the card networks to be card-not-present (CNP), is on the merchants. And fees associated with CNP transactions are higher for merchants. Merchants should be incented to move to more secure and better customer experiences, not penalized through liability shift and higher fees.
MAG’s expectation for the future is that timelines for these types of major technology retail deployments be agreed upon with equal weight among all stakeholders and are based on a feasible readiness plan all parties can achieve. In addition, intermediary deadlines must be required of all the third-party providers within the payments ecosystem to enable products and solutions that a merchant can implement in a timely manner.