The EMV liability shift at the gas pump is an opportunity to boost value—and revenue

Published September 2, 2020

Think back to April 2020. Everything changed almost instantly—but those early days of the pandemic are now five months behind us. That was fast, right? Now consider April 2021.That’s only seven months away. And it’s likely to come around just as fast—bringing with it the April 2021 liability shift date for complying with the EMV global standard for pay-at-the-pump transactions.

For convenience and fuel retailers that miss the deadline, you could have a figurative bullseye on your gas pumps for fraudsters in just seven months—they already know gas pumps are among the last viable targets for card skimming. After the shift date, any fraudulent transactions that happen at your non-compliant pumps will become your bill to pay.

And it’s true that upgrading your pump payment technology means some significant changes to your forecourt. But it could also be a smart, ROI-driving investment if you use it as a time to upgrade your pumps with technology that also engages your fuel customers while they're filling up...and helps propel them inside the c-store to buy higher-margin purchases. You’ll also have greater peace of mind that their data and your business are also protected.

Ignoring the EMV liability shift date is risky

First, the nuts and bolts. If you don’t upgrade your pumps by the EMV technology implementation liability shift date, and a data breach occurs at one of your payment terminals, your business will be subject to fines, fees and other associated costs from card companies and card processors.

How much could you face? Conexxus estimates the liability per non-compliant store will increase from just over $1,700 in Q4 2020—to an astonishing $10,635 in the fourth quarter of 2022.

Also, if your payment terminals accept magnetic stripe payments only and a fraud perpetrator makes a purchase by swiping a stolen card—and isn’t caught—your business is liable for that transaction. Besides losing out on the revenue from the purchase, you must refund the charges to the cardholder and pay the charge-back fee. You're also potentially facing reputational risk and the lost lifetime value of that customer if they now feel your brand isn’t safe enough to return to in the future.

And that’s not all. Criminals don’t stop at a single attack. Once they discover a non-compliant gas station is vulnerable, they’ll continue to exploit it, which presents a thorny, ongoing and expensive battle. So, upgrading to EMV technology isn’t a luxury—it’s a necessity.

Proven protection against fraud

EMV-compliant technology offers proven protection against “card-present” fraud, i.e., data theft from cards physically processed at the point of sale. Visa reported that merchants who had completed the chip upgrade experienced a 76 percent decline in counterfeit fraud dollars between December 2015 and December 2017.

But how does the technology work? Magnetic strips on payment cards are encoded with static data that’s easily compromised by card skimmers that thieves covertly install on your gas pump payment terminals. But unlike magnetic strips, EMV chips create a secure, dynamic network link and generate a one-time code for every payment.

Some gas stations have delayed their EMV upgrades by using a short-term workaround for magnetic strips: requiring customers to enter their zip codes prior to a purchase. But that’s still not as secure as accepting EMV chip cards only, and your financial risks are still great: Conexxus estimates your stores could face costs up to $201,000 per store over the next seven years.

Why the delay in EMV upgrades?

As you know, gas stations were required to implement EMV technology at payment terminals inside the store back in October 2015. Mastercard and Visa set EMV technology implementation liability shift dates of October 2016 and October 2017, respectively, for automatic teller machines—many of which are found in gas station convenience stores.

Conexxus estimates that gas stations that do not upgrade could face costs up to $201,000 per store over the next seven years.

The credit card companies have given gas stations the longest timeline for implementing EMV technology at fuel dispenser payment terminals. And the original liability shift date of October 2017 has been extended twice. In response to industry feedback about the challenges of EMV implementation, the deadline was extended to October 2020 and extended again by six months. Then Mastercard, Discover and American Express extended it to April 16, 2021, and Visa pushed it back once more to April 17, 2021.

COVID-19 slows EMV updates

Another factor delaying the move was the pandemic’s impact on labor and supply chain. Many U.S. gas stations use pump hardware manufactured in China and other countries. Plant shutdowns in these countries and supply-chain disruptions delayed new equipment installations and testing in some cases.

But, more critically, the industry now faces a shortage of technicians to install EMV technology at fuel dispenser payment terminals. In some areas, they weren’t allowed to get out to gas stations to do the work due to shelter-in-place orders first issued in spring 2020.

With only eight months before the April 2021 shift, this shortage of technicians will leave many retailers without the resources needed to upgrade and comply before the deadline. That’s why it’s critical for convenience retailers to move now, while resources are still at least available—rather than waiting until the last minute when the entire industry will be stretched too thin to help at all.

Use EMV technology upgrade to your advantage

When the October 2020 liability shift date was still in effect, Conexxus conducted a survey of gas station owners and found that 70 percent still hadn’t deployed EMV technology at a single site. Forty-three percent said the risk doesn’t justify the expense of upgrading.

But it pays to think of compliance as an opportunity to evaluate your overall business strategy—and take concrete steps toward modernizing your store and differentiating your brand experience.

First, consider your customers’ expectations. The fact that consumers see EMV chip card technology as overwhelmingly positive helps to justify compliance. Indeed, in a 2018 Worldpay survey:

82 percent of credit card users reported positive EMV chip card experiences
72 percent rated EMV technology as more secure than magnetic stripe technology

But that’s not the only way you can invest in your customer experience. While you’re updating your outdoor payment terminals for compliance, consider adding cloud-based forecourt advertising technology to your pumps to drive added ROI.

By serving personalized promotions, loyalty offers and other content via videos that play above the fuel dispenser while consumers fill up, you can differentiate your business and increase overall revenue, by promoting purchases like higher-margin foodservice items that drive people inside the store to buy more. Or you can offer the ability to order at the pump for curbside delivery.

Think of that extra convenience...wrapped in a more memorable experience. It goes a long way in giving your customers a good reason to come back again and again—especially if they can’t get that modern, personalized and engaging experience at any other gas station nearby.

It’s a strategy that works:

62% of shoppers are influenced by rewards for food & drink purchases, according to a Coca-Cola MFour 2019 report
84% of shoppers like the idea of pre-ordering drinks, snacks or other store items ahead of time or at the pump (Source: Coca Cola MFour report NACS 2019)

Ernie Floyd, senior director of product management at NCR, agrees that implementing a consumer engagement platform with EMV enables fuel merchants to combine EMV compliance with higher revenue. When calculating the return on investment from combining EMV compliance and consumer engagement platform implementation, Floyd recommends including both potential cost savings and potential new revenue.

Cost savings:

Cost of current charge-backs x 10 (to account for a predicted increase in fraud starting in 2020)
Acquirer cost for lower-/higher-risk merchants
Lost revenue from impacted customers and negative publicity
Cost of recovering brand reputation

Potential new revenue:

Conversions from personalized offers at the pump
New foodservice revenue with order-at-the-pump capability
In-store promotions that increase basket size
Better customer experiences leading to greater brand loyalty and overall lifetime customer value

Steps to achieve EMV compliance at the pump

Now that you know that it’s important and potentially profit-boosting to start your EMV upgrades now—what steps should you take? To upgrade your fuel dispenser payment terminals to accept EMV payments, you’ll need to make both card processing hardware and POS software upgrades. At a high level, compliance occurs in three steps:

Contact payment processor and POS provider, assuming they are different companies
Make sure all of your credit card terminals can accept EMV chip cards
Upgrade your POS system and software to meet EMV compliance standards

One cost-saving measure is to invest in cloud-based infrastructure. That approach enables you to update and upgrade more easily across systems and platforms. With cloud-based EMV, all the processing logic and data for EMV transactions is hosted in the cloud, making software updates instant, and control and management easy.

You’ll also want to let customers know about the steps you're taking to shield them from skimming and other fraud using forecourt advertising. Don’t forget to train your employees to prepare for—and promote—your upgrades, to further boost brand affinity.

Speaking of brand affinity and customer experience, they really are the top reasons to invest in your EMV upgrade. Consider it part of your broader convenience store transformation strategy—especially now that you see EMV upgrades don’t have to be expense-only but an opportunity to create a tangible ROI while differentiating your business.

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