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Monday, May 18, 2020

EMV relief for pay-at-pump

Gas station operators with automated fuel dispensers gained more time to make those dispensers EMV compliant. Their deadline for EMV compliance is now April 2021. Visa, Discover and American Express all recently extended their deadlines; Mastercard is expected to soon follow.

Most card-accepting businesses were required to be EMV compliant by 2015. Those that aren't assume liability for any card fraud that can be traced to their non-compliant terminals. Gas stations were given an additional two years to bring their automated fuel dispensers into compliance, however, because of the cost and technological complexities associated with retrofitting or replacing pumps.

The deadline eventually was moved to October 2020; now they have another six months to comply. "The new date gives petroleum merchants more flexibility on installing new systems as many are dealing with economic and logistical challenges limiting their ability to make changes at their pumps due to the COVID-19 pandemic," Discover said in a statement.

According to Thad Peterson, senior analyst at Aite Group, it costs about $5,000 to retrofit an automated fuel dispenser for EMV compliance; new EMV-compliant dispensers cost between $16,500 and $20,000 to install. "This doesn't include the incremental cost of upgrading controllers, increasing bandwidth, and certification and installation," Peterson wrote in a recent report. A 2019 survey of U.S. fuel stations by Connexxus, a technology standards group, found that although 86 percent had upgraded in-store terminals for EMV compliance, only 13 percent had fully deployed EMV technology at their pumps. Forty-three percent of station owners cited cost as the primary reason for not deploying EMV at their pumps; about the same percentage said they weren't convinced the benefits of EMV were worth the investment.

"The fuel segment has its own unique challenges, which we recognized when we first set the chip activation date for automated fuel dispensers/pumps two years after regular in-store locations," Visa stated when announcing the deadline extension.

Specter of fraud

EMV technology aims to thwart fraud schemes, such as use of counterfeit cards, which tend to be tied to card skimming. Visa has reported great progress in the move to EMV in other business verticals. "More than 1.7 million merchants representing more than a third of storefronts are now accepting [EMV] chip cards," Visa wrote. Visa added that "we are already seeing a 43 percent reduction in counterfeit fraud at chip-enabled merchants."

According to Visa, card fraud related to non-compliant gas pumps accounts for just 1.3 percent of total U.S. card fraud. Connexus estimated that fraud associated with non-compliant gas pumps could exceed $450 million this year.

The Merchant Advisory Group and other merchant groups had been pushing for a two-year deadline extension, particularly in light of the economic downturn caused by the COVID-19 pandemic. Visa had responded that it was holding firm on making the liability shift effective in October 2020.

But that was before the COVID-19 pandemic started eating into gasoline sales. Retail fuel sales during the final week of March, for example, were down 47 percent from the same period in 2019, according to the business intelligence firm IHS Markit. And Denton Cinquegrana, chief oil analyst at the Oil Price Information Service in Rockville, Md., said OPIS analysis points to "a very legitimate chance that oil demand will be down 50 percent this year" compared to last year. end of article

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