Not Upgrading Pumps to be EMV-Compatible Could Cost Fuel Retailers Big


With the April 2021 deadline for EMV compatibility less than six months away, fuel and convenience retailers must upgrade their payment equipment at the pumps.

All retailers know this — but it wasn’t clear just how much not upgrading could cost a retailer in real dollars until recently. Mercator Advisory Group, an advisor to the payments industry globally, performed a comprehensive, independent analysis and created a calculator to estimate the costs.

While Mercator’s analysis took a decidedly conservative approach to calculating the numbers, the figures the group came up with were not insignificant. For example, the average cumulative liability shift of EMV at the pump over 12 months of operation, for a retailer with 12 locations evenly spread across low-, medium- and high-risk areas, is estimated to be $207,783 total, or $17,315 per site — not exactly pocket change. This could change dramatically depending on the risk position of each station. 

These costs will occur because after the deadline, in the case of fraud resulting from counterfeit card use at fuel dispensers, full liability shifts to the party in the payment chain with the least secure payment technology. That means fuel and convenience retailers who have not upgraded their automated fuel dispenser (AFD) equipment to EMV will pay for fraudulent transactions and the cost of dispute management and compliance fees and fines.

With the cost of doing business increasing all the time, no owner or operator wants to be saddled with this kind of bill due to something like fraud. Fortunately, there is a simple fix for this: Upgrade AFD equipment to EMV-compliant payments systems, and avoid the costs associated with shifting liability. The upgrade projects aren’t inexpensive, but neither is the cost of full liability.

What’s more, as more sites add EMV at the pump, fraudsters will likely focus on those sites and fuel dispensers without support for EMV — and no retailer wants to become known by their customers as an easy target for fraud.

Of course, upgrading to EMV-compliant payments systems at the pump isn’t the only way to protect a fuel and convenience business — and customers’ payment cards and data — from falling victim to fraud.

5 More Ways to Prevent Payments Fraud at the Pump

Like upgrading to EMV-compliant dispensers, these five tactics and tools can also help protect payments from fraud.

1. Point-to-point encryption (P2PE)

P2PE secures the payment form factor (e.g., POS readers at the pump and in a store) and encrypts a transaction when the payment card engages with the card reader.

2. Tokenization

This security protocol reduces Payment Card Industry data-security standard (PCI DSS) scope and can reduce the risk to a merchant that processes, stores, or transmits cardholder data. It also provides the means to perform repeat transactions in alias forms. A customer’s card can be tokenized during the first transaction with a retailer, and the same token can then be used for subsequent secure transactions.

3. Disallowing fallback

Under current rules, fallback transactions—where a chip card is swiped instead of inserted—are allowed, but merchants can avoid the inherent fraud risk by disallowing fallbacks at the pump and prompting the customer to come into the store to verify identity or present another form of payment.

4. Network connectivity infrastructure

The right network solution can help to secure transactions — both at the forecourt and at indoor point-of-sale solutions— and protect against fraud. Look for a certified Managed Network Service Provider (MNSP) network solution that can support the hardware being installed at the dispensers while providing the highest levels of payment security, always-on connectivity, and 24/7/365 monitoring for not only the hardware, but also the network connection.

5. Data insights

Analyzing the performance of each pump is useful not just for general business knowledge, but also to detect what parts of the forecourt are most likely to experience fraud. For example, a pump in an outside lane, further from visible cameras, will most likely be more attractive to a fraudster, who can try several cards before finding one that works without drawing suspicion.

Bad actors will continue to try new ways to defraud fuel and convenience retailers — but on the bright side, there are plenty of technologies and tactics that owners and operators can deploy to shut down fraudsters.

Dan Lyman is head of fintech payments for North America at TNS. In his role he identifies and drives all sales and business activity within his region and contributes to global strategic decisions alongside his European and Asian counterparts, and the wider TNS corporate leadership team.