EMV at the pump: Your questions answered
In October gas stations will be under new obligations for accepting card payments at the pump. In this article we answer your frequently asked questions about how the change will affect the industry.
With the EMV (chip card reader) changeover just a little under a year away, now is the time for gas station owners and ISOs to be full getting to grips with how they should be approaching the impending deadline. And of course, understanding the EMV changeover more fully will provide stakeholders with a better sense of why it's so necessary and how to actually conduct it.
Here are some of the most frequently asked questions, and answers, that gas station owners need to know.
1. Just what is "EMV compliance" anyway?
The Europay, Mastercard, and Visa (EMV) protocol is the process of authenticating card present payments i.e. the security standard to prevent unauthorized use of a payment card at a terminal. For gas stations, the most significant upgrade on current their current payment terminal is installing a chip card reader, which requires dipping to activate and has the security layer of requiring a number code to authenticate a payment.
2. Why should I even make the change to begin with?
There are several good reasons to make the EMV changeover, not the least of which is to remove liability for any chargebacks may occur at the terminal. Many independent gas stations are already liable to cover the cost of chargebacks, but there will be a clear distinction in liability once the deadline has passed; all merchants that comply with EMV standards will not be liable for chargebacks, and all merchants that do nor will be liable. The difference is cost could be significant.
Additionally, using EMV systems means that gas stations are not only protecting themselves, they are also protecting their customers as EMV protocols all-but eliminate skimming.
Thirdly, implementing these protocols may be a competitive differentiator for gas stations as chip cards become ever more ubiquitous and this impacts consumer experience accordingly. When the customer is aware that a chip card reader not only protects them but makes their payment process faster and more efficient, the terminal keeps customers coming back which is an excellent recipe for long-term success.
3. Am I required by law to comply?
No. EMV compliance is not a matter of federal, state, or even local law. And issuers will continue to process transactions processed via the old terminal, so gas stations that do not convert will still be able to accept payments at the pump.
However, for companies who make the EMV changeover, credit card companies will assume the liability involved in a chargeback. For those who don't, chargeback liability will instead move to the individual gas station. So those who make the move to EMV compliance will protect themselves against being on the hook for fraud.
4. So what do I need to be EMV compliant?
Predominantly EMV compliance means upgrading your credit card terminals and wiring to models that can accept payments via both EMV chip payment or via magnetic strip. That's it. It does, however, require all terminals to be so upgraded, a point which has left some business owners—like gas station owners who may have one terminal for every pump—concerned about the cost compared to the relative level of risk. Just because it's a simple task, however, doesn't make it easy or inexpensive; a large amount of cabling can be involved, and the hardware required can make this simple job very difficult to actually accomplish especially as the number of experts that can install the specific at-pump terminals is limited.
5. I've been offered free hardware to make the move. Should I take it?
Be very cautious when it comes to accepting free hardware. There are, of course, some excellent merchant account providers that offer free hardware as an inducement to get new business in the door. However, there are also less scrupulous providers that are willing to eat the cost of hardware up front in exchange for other inducements down the line. Some who offer free hardware will also charge increased rates for processing payments, which will hurt profitability later. So be sure to review the entire deal package when considering an offer for free hardware; consult an attorney, accountant or similarly-qualified individual to get the full picture.
6. Why bother with EMV? Isn't everyone just going to skip to contactless cards and mobile wallets anyway?
It is true that mobile wallets are gaining a lot of ground for users. It would be easy, therefore, to think that EMV isn't worth the bother, and that mobile wallets or in-app payments should be the focus for gas stations. However, adoption isn’t at critical levels yet and isn’t expecting to be any time soon; in skipping ahead to accepting NFC payments gas stations actively ignore a group of customers that are ready to pay now with EMV-based cards. These are actually most of the cards in play. So in planning for the future and bypassing a critical step, you send a large subclass of market directly to your competitors.