EMV at the Pump Extension Isn’t More Time to Delay
At the end of 2016, Visa and MasterCard extended the deadline for U.S. gas station owners to update their pay-at-the-pump terminals to accept EMV payments. Handwringing followed quickly thereafter, with security experts noting a recent rise in card-skimming at fuel pumps and bemoaning the extended EMV deadline for giving criminals more time to collect card numbers and commit fraud.
These are not unfounded concerns. Fraud is a crime of opportunity, and less-sophisticated criminals are taking advantage of the few retail locations where card-skimming techniques still prove valuable.
With the upcoming gas pump migration, security experts are expecting a repeat of the issues and frustrations — reported by consumers and merchants alike — that plagued 2015’s retail point-of-sale (POS) EMV liability shift. Instead of deterring gas station owners from upgrading, these fresh memories should create a sense of urgency to find an EMV solution that will protect them from liability without introducing friction for customers. Luckily, convenient payment solutions and secure transactions don’t have to be mutually exclusive, and making the right upgrades can even improve the customer experience.
By looking at the pitfalls of the first EMV liability shift and the viable solutions that have emerged to address consumer pain points, it can be reasoned that the deadline extension for EMV payments at the pump can help to smoothly implement faster, more secure, more convenient payment technologies at gas stations, which see some of the country’s highest transaction volumes and average purchase values.
Learning From Past Experience
The legacy of the October 2015 point-of-sale EMV liability shift is one of continued frustration. A recent study found that more than three-quarters of Americans view chip cards favorably, yet backlash continues on social media, and even Square CEO Jack Dorsey said people “hate” chip cards at the last Money2020 conference.
Why? Because little was done to educate consumers on the full scope of EMV security benefits and how they would affect checkout experiences. EMV cards are praised for being more secure, but consumer education on how to use them at terminals was lacking. Perceived longer processing times came as frustrating surprises to the average shopper when, in fact, the actual time of a “dip” transaction equals that of a traditional magnetic stripe card. The only real difference is the length of time the card remains in the point-of-sale terminal.
In addition, the erratic nature of the EMV rollout — with only 37 percent of merchants ready as of October 2016 — has customers baffled and dissatisfied. Resistance to significant change at the checkout counter is understandable from both the merchants’ and their customers’ perspective, especially when that change introduces confusion on both sides of the register.
But in resisting one change, the fundamental need for stronger security has been neglected. EMV has been tied to negative customer feedback, making cautious merchants shy away from exploring the direct technological solutions that can speed up transaction times and solve customers’ convenience problem.
A Better, Faster Future
The key to success with any new payment technology is balancing convenience, ease of use, speed and security. While it’s only a tiny portion of a day, the seconds it takes to process an EMV dip transaction is perceived as too long for consumers who have spent decades swiping magstripe cards, then placing the card in their wallet or purse while waiting for their receipt to print.
Visa, MasterCard and American Express have each released versions of their EMV transaction processing specifications (QuickChip and M/Chip Fast, respectively, for the first two payment brands) that modify the EMV cryptogram generation sequence and POS messaging to reduce the time cards stay “dipped” in terminals. The biggest obstacle to these transactions is that merchants need terminal software updates, but the customer benefit is headed in the right direction. None of these new systems require consumers to leave their cards in chip readers for the entire duration of a transaction, making the process more familiar to former magstripe users.
Merchants also have the opportunity to give consumers a tap-and-go, contactless EMV experience — a move that would be beneficial for frustrated consumers, and one that’s still very much achievable. In fact, almost all new EMV terminals have NFC contactless hardware built in, supporting contactless payments. Fitting more comfortably into consumers’ day-to-day lives, contactless payment cards are an easy addition to American wallets, and consumers could find it more convenient to pay with NFC-enabled devices, like smartphones or wearables, all the while being protected by EMV payment security standards.
Recent research into Americans’ use of contactless payments is lacking, but contactless payment forms skyrocketed ahead of others in Australia, Canada and the European Union after efforts were made to increase support. It stands to reason that American consumers would also embrace the contactless EMV payment experience as a solution to perceived speed and convenience issues.
Putting It All Together at the Pump
There’s a lot of unique context behind the deadline shift for gas stations, but the big takeaway for gas station operators is that this extension isn’t more time to delay. It’s the correct amount of time for a change of this scale to take place, and an opportunity to take proactive actions now to avoid potentially costly headaches later.
Adding requisite EMV terminals to fuel pumps can cost as much as $10,000 and will also require removing pumps from service, temporarily decreasing the station’s revenue-generating capabilities. Costs could be even higher if station owners need to buy new pumps or break concrete to lay new cable, one of the fuel industry’s “unique challenges” referenced in the decision to extend the compliance deadline.
Every change to hardware on a fuel pump also requires recertification, a time-consuming process that will cost these business owners additional money. In effect, the extended deadline is really just a longer period over which gas station owners can spread costs, make extensive upgrades, and future-proof their technology.
If owners begin the process now with contactless in mind, they can simultaneously upgrade to EMV and build in support for contactless payments that appeal to consumers, thus circumventing issues unearthed by the first migration and getting customers through their pumps faster.
Additionally, standard card readers exposed to wind, rain, snow and heat at pumps will require more long-term maintenance than NFC payment terminals in the same elements. Finally, over the next three years, we can expect contactless payments to become more commonplace and intertwined with other shopping experiences and everyday functions.
Even now, automakers are showing off how well their cars communicate and interact with the world around them. In just a few short years, an app running on a car’s dashboard could pay for fuel all by itself. So if gas station owners take full advantage of the extension, they will be able to plan for that future, learn from the past, avoid making the same mistakes, and treat contactless as a key part of the EMV upgrade cycle.
Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.