Payment Networks Give Fuel Sellers Reprieve amid Shortage of EMV-Compliant Fuel Pumps
Christmas came early for fuel retailers. Three of the four major U.S. networks have pushed back the EMV liability shift for fuel pumps three years. The cost of EMV migration at the pump—which is more extensive and complex than POS changes and can require pump replacement—now can be spread out over a longer implementation period, Randy Vanderhoof, director of the U.S. Payments Forum, tells Paybefore.
Citing challenges ranging from a shortage of regulatory-compliant EMV hardware and software—and their installation—to fuel retailers having to uproot old pumps and replace them with more modern ones, Mastercard, Visa and American Express are pushing back the deadline for the EMV liability shift for fuel pumps to accept chip-enabled cards three years to October 2020 from October 2017.
No pumps currently are compliant except at a few test sites, according to Gray Taylor, executive director at Conexxus, a nonprofit technology organization focusing on the development and implementation of standards, innovation and advocacy for the convenience store and petroleum market. Approximately 15 to 20 percent of pumps have the hardware installed, but not the certified software, he adds.
The payments networks said they remain committed to EMV technology but acknowledged implementation challenges as the reason for the new deadline. So far, Discover Global Network has not pushed back its liability shift date.¹ A spokesperson tells Paybefore the payments network is “continually working with merchants to make the EMV transformation successful across all categories. To further assist our fuel merchant partners, Discover is considering extending the liability shift for automatic fuel dispensers.”
Over the past several months, Mastercard has had “extensive discussions” with fuel merchants, issuers, acquirers and other stakeholders regarding challenges inherent to automatic fuel dispensers (AFDs), according to an announcement.
Visa said it recognized the fuel retailing industry had “unique” obstacles when it first set the chip-activation date for AFDs two years after regular in-store locations, which was October 2015. “We knew that the AFD segment would need more time to upgrade to chip because of the complicated infrastructure and specialized technology required for fuel pumps,” Visa said. For example, older pumps might have to be replaced before adding chip readers, and there’s still an insufficient supply of regulatory-compliant EMV hardware and software to enable most upgrades by 2017, Visa noted.
American Express concurred the original date is not realistic. “We want to ensure these merchants have the time necessary to work through this process so they can upgrade their systems to accept EMV chip cards and enhance their security,” said Jaromir Divilek, American Express senior vice president, global network business.
Because card readers for fuel pumps are highly specialized, “it’s not like you can take an off-the-shelf EMV reader you would plug into a cash register or standalone device in a retail store for the fuel pumps because there’s … internal controls in the fuel pumps that make the reader kits more complex and much more expensive,” Vanderhoof explains.
Once supply of compliant EMV hardware and software catches up with demand, “the next big challenge for retail petroleum is that it will require a team of technicians to install the equipment in each pump at every retail location,” says Vanderhoof. There are nearly 1.5 million pumps in the U.S. market, he notes.
“The impact [of the three-year extension] on retail petroleum is that [retailers] can move forward with a more planned implementation over an extended period of time and spread out the costs of upgrading each pump and not be subject to the additional costs of the fraud liability they would have started to absorb,” he says.
As fuel retailers work toward meeting the new deadline, Mastercard and Visa noted in their announcements that they have tools to fight fraud during the migration, such as Mastercard’s decision and fraud detection service Decision Intelligence and the Visa Transaction Advisor.
The Electronic Transaction Association applauded the deadline extension, saying: “Taking into account the migration challenges and relatively low fraud at AFDs, the card network liability shift deferment is a positive and balanced action supporting merchants and industry EMV migration efforts.”
Vanderhoof says the U.S. Payments Forum formed a petroleum industry work group more than a year ago and met regularly to consider the challenges it was seeing with the EMV liability switch at the pumps, and conveyed petroleum retailers’ issues to the payments networks, issuers and acquirers. “Meeting with all stakeholders to understand the challenges in the market is the way to solve problems today,” he says.
- Mastercard: Nearly One Year in, Merchants, Consumers Getting on Board with EMV
- EMV Rollout Initially Boosting ATM Fraud, but Could Eventually Slow It
- By 2020, EMV Could Hit its Full Stride in the U.S.
¹Update: Discover announced on Dec. 7 that it also was pushing back the EMV liability shift deadline for automated fuel dispensers to October 2020.