What’s happening outside of Washington may soon get the attention of policymakers. The date when liability for fraud hits fuel retailers unless they have fully enabled EMV chip card readers at their automated fuel dispensers (AFDs) is right around the corner—October 1. However, it is estimated that only about 30% to 45% of the convenience industry will be fully EMV deployed by October 1. Worse yet, it’s projected that the industry could be hit with a whopping $450 million in counterfeit fraud due to the liability shift. That’s no small number for an industry whose average pre-tax profit is $71,784 per store.
By and large, c-store retailers are trying to make the necessary changes but face external limitations on equipment and software programming that they cannot control. Yet these retailers will still be on the hook.
If Only You Could Flip a Switch
Many people assume the EMV transition is as easy as getting new point-of-sale (POS) hardware and turning it on, but the transition process is much more complex. To fully transition, retailers must retrofit or install new fuel dispensers, receive new certified software and have that software installed by certified technicians. This is why the fuel deadline was deferred three years to October 2020.
As the new deadline approaches, the industry still faces supply chain constraints. There are reported delays and backlogs in each step of the process. In a recent Conexxus survey, retailers who were trying to make the transition cited the lack of software availability as the No. 1 challenge, followed by challenges with hardware installation and upgrades.
While the cost to upgrade fuel dispensers is exorbitant, the expected fraud losses could push many c-store retailers out of business. Fuel dispensers are targets for thieves, and they often are a testing ground for fraudulent cards because customers can use a payment card without seeing a store employee. During the liability shift for inside store sales, merchants saw thieves targeting sites that were not fully EMV enabled, especially those along major interstate corridors. NACS expects the same to happen with the AFD liability shift and cautions retailers to make the transition as quickly as feasible.
The Crux of the Issue
The EMV transition in the United States, dictated by the major card networks, has been a mess. At the crux of the issue is how EMVCo, the payment standard-setting body controlled by the major card brands, writes and requires standards for payments technology without any other industry having a voting voice—no retailers, banks, smaller networks, fintech companies or consumer groups make those decisions. For example, EMVCo released the specifications for chip card technology that were then implemented by the major card brands and rolled out in the U.S. without PIN or another form of dual authentication, which differed from how EMV was rolled out in the rest of the world.
If retailers and other stakeholders had a true voice in the process, imagine how different and how much smoother this transition could have been. Fundamental reform is needed to ensure similar messes don’t happen again (and again).
For EMV research and compliance resources, visit www.convenience.org/EMV.