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The EMV at-pump deadline: where are we now?

With just under a year to go until the deadline goes live and absolute, we can now take a look at where we are now, and by extension, where we're likely to be when that deadline arrives.

The move for gas stations to accept Europay/Mastercard/Visa (EMV) standards at the pump has been slow and often fraught with difficulty. Despite this, it remains urgent for independent gas stations to get to grips with the new landscape and understand the impact not implementing the required changes will mean for them. With just under a year to go until the deadline goes live and absolute, we can now take a look at where we are now, and by extension, where we're likely to be when that deadline arrives.

Consumer protection is imperative

One consideration is paramount, as we approach the EMV deadline for gas stations: the average gas station customer has never so sorely needed the protections EMV can offer.

Fraud is on the rise. A CardConnect study noted Memorial Day 2018 inspection of gas pumps found over 70 credit card skimmers at local gas stations. This was sufficient impetus for the Secret Service to release a warning just ahead of the Fourth of July that same year to reconsider any kind of pay-at-the-pump option when it came to paying for gas.

Risk to fraudsters is on the decline. With gas stations representing some of the last places to incorporate EMV standards, fraudsters have focused their attention upon them. With gas stations not only given an out-and-out deadline for moving their systems, but also visibly hesitant to do so, the threat calculus for fraudsters represents low risk and potentially good reward.

But gas stations are not being convince

While customers are deeply concerned for their payment systems' security, the average gas station still has competing issues to consider.

Costs to the gas station are huge. While EMV results in better security, the costs of an EMV migration are substantial. W. Capra Consulting issued estimates that put the total cost of gas terminal conversion to be $6 billion by itself. Other estimates agree on a limited basis, with estimates ranging from $5 billion to $8 billion total, with individual stations set to shell out about $40,000 per pump.

Astute EMV operations, meanwhile, will see the value here in offering an easy payment plan and lowering costs as much as possible. Since costs are easily one of the biggest points balking gas stations, anything that can be done to address the cost objection should be done, whether systemically from the service provider's view—rebates, cash incentives, installment plans—or metaphorically from the rep's view with “you can't afford not to” objection counters.

Profits may be completely eroded. The costs of an EMV changeover are massive, and few gas stations can readily absorb those costs. The annual profit for some gas stations can be as little as $40,000, or even less. Given that this is roughly enough to cover the costs of one pump, it's easy to see why gas stations aren't exactly eager to put up potentially several years' worth of profit to accomplish this change.

With gas stations smarting over the price tag, and the direct cut to profitability, this makes the value of working with gas stations on what will almost certainly be their biggest objection, price, all the more vital. It's not merely that gas stations don't want to spend the money, but in a number of cases, they do not have that sum to spend. Breaking down the cost into manageable installments may be the biggest help to beat this objection.

The future's uncertain. It's bad enough that gas stations are being asked to put several years of profitability on the line. It's worse that they may not see many more years of profitability. Reports from Nuwire Investor suggest gas stations are potentially looking at reduced profitability in 15-20 years as electric vehicles gain ground and the primary draw for their ancillary products declines. The threat from electric cars is not immediate; just 1.2% of cars sold in the US in 2018 were electric and this only rose to 1.5% in 2019. But that doesn’t mean this isn’t being factored into gas station owners’ considerations.

And the idea that petroleum will never be a fuel source again is a ridiculous oversimplification. Thus, gas stations that provide the best value to consumers are most likely to remain open even if electric vehicles do gain a degree of popularity. One of the best signs of good value is protecting customer data, and EMV components help provide that protection.

The competition's in no rush either. eMerchant Broker has noted that only about one in three US gas stations have EMV card readers installed, or are starting to. There are several reasons for this; one is that not all equipment manufacturers haver the capabilities to even offer this yet.

Just two percent are considered “fully EMV-compliant.” With so few stations actually making the move, there's little weight to a potential customer threat of “I'm taking my business elsewhere!”, as there is no “elsewhere” to take business to. This is compounded

Again, this is a further opportunity to drive home a value proposition in beating the competition. The competition is actively disinterested, and often for the same reasons a prospective client is. By using those same reasons as a foil, the representative can prove that this is a competitive advantage. Once a station has this edge, it's not likely to be lost soon since the other station owners feel much the same way.

The EMV changeover: A huge opportunity awaits

Fully 98 percent of EMV conversion in gas stations is still waiting to happen. This represents a massive market that can be sold into, and knowing in advance what the objections are likely to be gives sales efforts a better chance at landing the critical blow and making the sale. Gas stations are concerned about their future going forward, and EMV conversion operations don't seem like a great investment. This is the time for sales operations to step up to the plate and make it clear there's more risk from not going ahead with EMV conversion than there is without.