Though Dale Williams is ready to implement EMV, or the latest round of data-security mandates ordered by the major credit cards, he’s not looking forward to it.
“It’s not a cheap date,” says Williams, director of information technology and retail operations for the 65-store Walters-Dimmick Petroleum, Marshall, Mich.
The company began preparing its pumps for the latest mandates back in 2008 as it worked to comply with Visa and MasterCard’s payment card industry (PCI) standards, which went into effect a couple of years ago. It made certain the pumps it was upgrading could handle the EMV (also known as Europay MasterCard Visa) additions as those deadlines approach.
Compliance deadlines for the smart-chip technology that EMV entails are Oct. 1, 2015, for in-store point-of-sale (POS); Oct. 1, 2016, for ATMs; and Oct. 1, 2017, for fuel dispensers.
Once those deadlines pass, fraud liability will shift from the card brand to the issuing bank, which in turn flows back to the retailer.
While those preliminary steps were made, like many retailers, Williams is holding off on making the EMV upgrades until the deadlines get closer.
“We’re updating card readers as we need to repair or upgrade them, but we’re not jumping fully into the expense side until closer to the deadlines,” he says. “Who knows? Deadlines may get pushed back. … Things may change.”
That theory may be shared by other retailers. One Texas operator, who asked to remain anonymous, says he was considering updating in-store readers but simply opting out of accepting certain payment options at the pump.
Either way, suppliers are set for the change. “Wayne is ready for new payment capabilities like EMV,” says Tim Weston, senior product manager of payment solutions for Austin, Texas-based Wayne, a pump and POS manufacturer. “We build our products on a modular platform that can be easily and cost-effectively updated to support this new functionality ... and [encourage retailers] to upgrade when the time is right.”
What Is EMV?
For retailers still coming to grips with the upcoming deadlines, Michael Tyler, senior marketing director for petroleum, VeriFone Inc., Clearwater, Fla., calls EMV a global security standard. Adopted in Europe and Canada, it uses smart-chip technology that involves personal identification number (PIN) pads and the register or in-pump POS. EMV consists of both hardware and software components.
Processors must be able to handle the transactions and card issuers have to get the specially equipped cards into cardholders’ hands.
The difference between what a merchant is doing today and what is going to happen with EMV involves the transaction itself. With EMV, Tyler explains, the integrated chip on the card has a dynamic number on it. It’s “dynamic” because it changes with every transaction, making it difficult to skim the card (pull important data from it) and make fake cards.
Once inserted into the reader, a validation code from the chip in the card goes off to a host. Once that host validates that the data is correct, it sends a new number that gets written to the chip.
Because of this, every payment device has to be able to read the card data, thus requiring an equipment upgrade. Most devices, Tyler says, can read data, but not all are able to write data to the imbedded, integrated chip. The same would be true for in-pump POS.
“There’s a huge benefit in reducing chargebacks by fortifying the infrastructure,” Tyler says, referring to fraudulent charges that are pushed back to retailers.
But what also changes is the process itself and the time it takes for a customer to pay. In a current transaction, a customer swipes the card and the transaction happens. With EMV, the customer inserts the card and leaves it there as the writing happens.
For many customers, Tyler says, EMV will be a learning process. “One of the things I learned is that it takes consumers a lot longer to embrace the technology than anyone planning for EMV thought it would,” he says. “Consumers are used to swiping and going on with their payment or dipping the card in and pulling it back out. With EMV, that cancels the transaction.”
Cycling Through
Knowing that every decision regarding data security won’t necessarily provide a return, suppliers are advising retailers to upgrade pumps as their normal replacement cycles come up, but certainly upgrade with equipment that can eventually be enhanced to handle EMV.
Many suppliers have opted to discontinue selling devices that can’t be upgraded to EMV, says Tyler of VeriFone. As many retailers opt to wait until the deadlines draw nearer to upgrade to EMV, “Unfortunately, here’s where inertia builds,” Tyler says.
Failure to meet the deadlines--whether or not a retailer is caught in the last-minute rush--would be a shift in accountability from the card issuer to the banks, which will most likely then be shifted to merchants. Accountability could include fraudulent charges, mitigation, card reissuance costs and legal fees.
With consequences potentially costing millions of dollars, Tyler says suppliers such as major oil companies are most likely going to demand retailers be compliant. “The oil companies … are not going to be put in the position where retailers will fail,” he says. “Independently, retailers may make the decision not to upgrade, but they’ll most likely have to de-brand.”
Retailers interested in site upgrades typically ask about EMV, says Parker Burke, director of marketing for Gilbarco Veeder-Root, Greensboro, N.C. But that’s not the only place where they’re investing. Often retailers are looking to assess their overall return on new dispensers, possibly including TVs in their pumps as a potential value-add or even a new revenue stream.
“When we talk to forward-thinking retailers, they are not only thinking about their path to EMV migration, but while they are upgrading their equipment, what are the other things they should do to improve their business,” Burke says. “While I’m doing [EMV], how can I take the opportunity to also improve my consumer’s shopping experience?”
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