ALEXANDRIA, Va.—For fuel retailers, the deadline for readying automated fuel dispensers (AFDs) to be EMV-payment compliant is less than a year away, and Conexxus research shows that many businesses lag behind in making the move. Although the major credit card companies pushed back an initial 2017 deadline to October 2020, the Merchant Advisory Group (MAG) warns retailers that another extension isn’t in the works.
The movement to Europay, Mastercard and Visa (EMV)—a chip-based payment system developed to make credit and debit card transactions more secure—has helped reduce payment fraud across the brick and mortar retail verticals. While the rest of the retail industry has migrated to chip payments technology at the point of sale, retail fuel is still working toward EMV acceptance outdoors at the AFD.
Starting next October, losses due to counterfeit fraud transactions at the AFD that are currently being absorbed by financial institutions will be charged back to merchants that have not implemented chip technology at the AFD. The global networks previously acknowledged that the AFD market required more time, providing AFDs a three-year delay from the original liability shift activation date of October 2017, which was two years after the rest of the retail community was subject to the same chip liability shift.
MAG formally requested another delay of two years in light of significant challenges that still remain for AFDs to achieve full chip deployment by October 2020. In response, both Visa and Mastercard have formally stated in writing that they remain committed to the October 2020 liability shift activation date for AFD transactions, according to Laura Townsend, senior vice president of operations for the Merchant Advisory Group, which advocates on behalf of 150 of the largest U.S. merchants accounting for more than $4.4 trillion in annual sales at more than 450,000 locations across the U.S. and online.
MAG has issued a call to action for all stakeholders to aggressively drive chip enablement to meet the October 2020 deadline. The group recommends that the industry focus on these two areas:
- Merchant education and action. Counterfeit fraud is increasing at 23% per year and is expected to reach $450 million in 2020 at the AFD. Thirteen percent of fuel islands are fully chip deployed as of June 2019, and 10% of transactions at AFDs are already chip on chip. Both of these figures suggest the competition is moving. What does that mean to those undecided or consciously choosing not to deploy chip technology at the AFD? The risk of sharing the $450 million in counterfeit fraud projected to hit the industry in 2020 is increasing. Planning your migration now is your best bet to avoid risk of financial losses.
- Supplier readiness. For those merchants who plan to deploy chip at the AFD, there are some significant obstacles that they need to overcome. First, among retailers that own and operate fuel sites not currently deployed with EMV at the AFD, more than 40% are waiting on software, Conexxus research indicates. Second, most of the global payment networks have announced support for a streamlined certification process that should reduce the dependencies in the end-to-end certification process to shorten a solution’s time to market, yet it is not clear which solution providers will be prepared to support a self-certification program. Third, a recent study among installers of petroleum equipment suggests that the shortage of qualified technicians was easily the biggest business threat cited in the study ranked eighth of 10 on a scale of 1 (not a threat at all) to 10 (major threat).
If merchants are expected to assume liability for counterfeit fraud by October 2020, the industry should be ready to support that migration in time. All stakeholders must take immediate action to accelerate preparedness and mitigate risk to the merchant of fraud losses as soon as possible.
Conexxus will host a two-part webinar series to help fuel retailers become EMV compliant. The first webinar, “Are you ready for Oct 1, 2020? Part 1: EMV Fundamentals and the Risk of Not Upgrading,” is set for Thursday, Dec. 5, from 12 to 1 p.m. EST. Part 2, “Are You Ready for Oct 1, 2020? Part 2: Practical Considerations for Implementing Outdoor EMV,” will be held Dec. 12, from 12 to 1 p.m. EST.
To register for Part 1 of the Conexxus EMV webinar, click here. To register for Part 2, click here. Contact firstname.lastname@example.org with any questions.
The December NACS Magazine cover story, “Ready or Not: Ignoring the Deadline for EMV at the Pump Could Be Costlier Than Upgrading,” offers an in-depth look at the EMV readiness issue. Subscribers, can click here to read the full story.