Some Retailers Balking at Pump Upgrade for EMV Cards

Gasoline retailers have three years to make their pump payment systems compliant with EMV chip-based payment cards.

October 08, 2014

STAMFORD, Conn. – Talk about sticker shock. The cost of upgrading gasoline pumps to comply with EMV chip-based payment cards has many gasoline retailers putting off the update for as long as possible, Payments Source reports. While major card firms have given October 2015 as the EMV liability shift deadline for merchants, gasoline companies gained an extra two years to convert their pumps, which will cost between $6,000 and $10,000 per pump.

NACS reported two years ago that the average card fraud associated with fuel pumps costs each store around $700 annually, but that Payment Card Industry security standards expenses jumped to approximately $2,000 per year. Last year, a report for the convenience store industry tallied card fraud at around $250 million annually.

“It’s probably the worst business case that exists in the retail industry,” said Steve Mott, principal of BetterBuyDesign. “What the card brands are trying to do to secure America is really costly for these small guys at convenience gas stations.”

Part of the reluctance stems from the fact that there’s some confusion as to what’s necessary — and what’s a reasonable amount to pay. “We may have three years before we have to go to the automatic fuel dispensary engagement with EMV, but I just think it is still cost prohibitive,” said Bill Deichler, a payments industry expert and former payments manager for Murphy Oil USA fuel company. He has long said the conversion will be expensive and slow in the fuel industry.

“Murphy was estimating that it would cost $20 million to $25 million to make the whole chain EMV capable at the pump,” said Deichler. “That means you are looking at about a 10- to 15-year payout on fraud numbers. It makes no sense.”