EMV (Europay, Mastercard, Visa) initiatives have been in place for nearly a decade and for convenience stores and gas stations since 2015. The card brands had provided and changed the EMV Liability Shift deadline for automated fuel dispensers no less than 3 times since. This essentially means that if you have a gas station that is not supporting (contact or contactless) EMV chip-based payments you are on the hook for ANY fraud or card transaction disputes.
Impacts of Fraud Liability Shift for Petroleum
EMV is designed to mitigate and shift the liability of fraud from the merchant to the bank issuer. The big issue here for station owners is that if they do not update their systems with EMV support, they expose themselves to 100% of the fraud. So, if I am a fraudster, even as the owner of the card I am using to purchase fuel, and the fuel pump does not support EMV, I can dispute any fuel transaction as fraud and there is nothing that the station owner can do to fight it.
Fortunately, I am an honest person, and I would never do that because it is not right. Unfortunately, the world is full of opportunists, and many will take advantage of the “system” whenever possible.
Update My Pump?!
Over the past 5-7 years, gas stations have known that they needed to make upgrades to support EMV. The difficulty with this upgrade is that it requires that the entire pump be replaced. Conexxus estimates that the average cost to upgrade a gas station’s pump systems is over $200K per location. This does not include lost revenue from the downtime it takes to pull out and install the new systems.
Add to that the delay it took for most station owners to bite the bullet, backlog of new pump orders, and the recent micro-chip issues….it could be months or even years until all the 150,000+ stations are updated with EMV capable systems.
Station owners are in a bind with the current situation, but there are other options.
A simple and inexpensive option for gas station operators would be to discontinue pump-based payment transactions to have the consumer come into the store and make payment on an EMV-capable countertop payment terminal. A new payment terminal costs about $500 and could be deployed the next day. Of course, that means that pay at the pump is not supported at all, creating an inconvenience for the customer and most likely lost business for the operator. But it is a viable option for operators in small rural areas.
Some larger brands, like Exxon Mobil, are leveraging customer mobile applications that integrate into the POS system that controls the pumps and allow the customer to pay right through the app. This is a great business case, the difficulty is that it still does not shift the fraud liability, as all the transactions go through as card-not-present, but it does create a great consumer experience and eliminates pump card skimming schemes.
Another option is a playbook that we are seeing in the restaurant business, utilizing QR Codes at the pump that a customer can scan, which links them to a payment page for them to make a manual card payment. Similar to the mobile app payment option above, this solution does not shift fraud as all transactions would be considered card-not-present.
The Uncertain Future
Automated Fuel Dispensing systems have been around for nearly 30 years. In that time, payment system regulations, requirements, security, and technology have changed significantly, and without a doubt, will continue to evolve. As a station operator, the pain of investing $200K+ to change out pumps adds the question…”will I have to do this again in the future?”, a very valid and significant question for certain.
Fortunately, pump system manufacturers are employing the latest tech into the pumps to include chip readers, NFC readers, cameras, touchpads and other elements to support the latest in payment acceptance capabilities. Unfortunately, these elements still require specialty software applications (kernels) that must be injected into each individual pump, and who knows if these payment readers will support the next generation of payment requirements.
Cloud EMV payments
An exciting innovation to come to light in recent months is Felix Payment Systems and its Cloud EMV Payment technology. Felix has developed the world’s first certified and compliant Cloud EMV Kernel infrastructure. This system enables any remotely connected device to behave as a secure retail EMV payment terminal. In addition, Felix Payment Systems is working on a solution that can support card-not-present transactions to process through the retail EMV infrastructure, essentially converting them to a card-present EMV-qualified transaction.
As such, Cloud EMV can not only bridge the gap for the current dilemma that gas station operators have, and transform gas pumps into EMV gas pumps as well as eliminate the concern for future updates.
Bridging the Gap for Pay@Pump EMV
As the situation dictates, gas stations are in a very compromised position with not only huge expense for upgrades, but also with the time that it can take to get new compliant pumps systems installed. Cloud EMV is a technology that can be employed today, with the existing infrastructure to bridge the gap. Felix Cloud EMV platform can be connected at the backend of the legacy pump systems to capture the card data and convert it to a EMV cryptogram for submission to the Cloud EMV Terminal.
This supports operators by shifting the transactions to the necessary EMV qualification, thus shifting the fraud liability off the station. However, this is only a bridge to help while the operator is waiting for true compliant pumps to be installed, as the legacy pumps are still prone to card skimming and other fraud schemes that EMV eliminates.
Futureproof Pay@Pump with Felix Cloud EMV
Looking at the long-term roadmap of payments, the need to protect merchants from having to react to future changes in payment regulations and systems, Cloud EMV offers the only solution. Looking into and predicting what the future will bring for the payment ecosystem is a moving target that can never be 100% accurate. The only thing for certain is that no matter the point of interaction with a consumer, the ability to dynamically and instantly adapt to changes is imperative, this is why Cloud technology is so important.
Rather than relying on a static or embedded solution to control these interactions, Cloud EMV Terminal technology enables devices and connections to be updated in real-time, not only eliminating concerns of future POIs (Points of Interaction) but offering the ability for updates and changes to happen to support new use cases and consumer experiences.
A Glimpse into the Future
Where is the future that we were all promised as kids? Growing up in the 70’s and 80’s, we were led to believe that there would be flying cars running on proton drives and commerce would be done with a wink into a camera. Although flying cars is still a distant reality, the only limit to our ability to create futuristic commerce experiences has been hardware. Felix Cloud EMV Terminal technology allows the world to unlock the true potential of payment acceptance and consumer commerce.
Facial Recognition and Biometric Payments
The advancements in facial recognition and biometric payment technology are becoming very real solutions. Companies like KNWN and Fortress Identity are building the next generation of ubiquitous virtual biometric authentication technology. This technology coupled with Felix Cloud can deliver a seamless and ubiquitous solution that can allow a consumer to pay for goods or services without ever having to pull out a card or wearable. Simply use any camera connected to the pump or POS to scan a customer’s face to authorize a payment.
Cloud EMV for Connected Car Payments
The connected car is a reality of the latest generation of automobiles being developed. By connecting the car to the Felix Cloud, the automobile can be an extension of the consumer’s wallet to connect to fuel and charging station systems to authorize secure payments.
With the challenges faced by fuel station operators today, it is critical that new technologies like Felix Cloud EMV Terminal and others step in to support the security, futureproofing, and advancement of innovative solutions for the petroleum industry. As difficult and expensive as this shift is for merchants, there is an immense opportunity for these merchants to take steps to leap ahead of the competition and create new and exciting experiences for consumers and gain market share.
If you would like to find out more about the Felix EMV cloud payments infrastructure get in touch.