RESTON, Va. — Fuel and convenience retailers who fail to upgrade payment equipment at the pumps to EMV could face potential costs of, on average, $17,315 per site, or $207,780 over 12 months post liability shift, new analysis from Mercator Advisory Group and Transaction Network Services (TNS) has found.
Because full liability shifts to the party in the payment chain with the least secure payment technology once the April 2021 deadline passes, any fuel retailer who has not updated their AFDs to support EMV-certified chip readers will automatically lose a chargeback inquiry and be subject to additional compliance fees.
The estimate is based on a 12-location fuel enterprise with sites that are distributed across low, medium and high-risk zones for card payment fraud and considers the cumulative impact of losses as the locations become targets for counterfeit card usage. Compounding the losses are the additional network penalties for excessive disputed transactions. The model takes a conservative approach to calculating the cost of the liability shift, according to TNS.
Mercator—an advisor to the global payments industry—performed a comprehensive, independent analysis and created a calculator that revealed the potential true costs of this shift.
“The liability shift could cost a significant portion of a retailer’s revenue, making it critical for owners/operators to upgrade now to gain more modern fuel dispensers, supported by the most advanced network connectivity technology, and reduce chargebacks,” said Brian DuCharme, vice president, product management for payments at TNS. “As more sites add EMV at the pump, fraudsters will likely focus on those pumps without EMV—and no retailer wants to become known by their customers as an easy target for fraud.”
To determine these costs, Mercator’s calculator integrates data points from independent research and surveys on existing fraud rates at service station locations and takes into account risk factors associated with each site. Mercator assumed a lower loss rate than the existing analyses and used that as a starting point for its calculator. It then took the lower rate and applied it to only high-risk locations, decreasing this rate for medium- and low-risk sites. The baseline number is for the first month following the liability shift, and for every month following, a concentration effect is applied.
“It should be noted that the numbers Mercator’s calculation found could change dramatically depending on the risk position of each station site,” said Tim Sloane, vice president of payments innovation at Mercator. “Retailers should use the calculator to estimate their own liability based on the fraud risk for where their sites are located, which card schemes have posted on their websites.”
TNS is a certified managed network service provider (MNSP) by Gilbarco and Verifone and is a Level 1 Payment Card Industry Data Security Standard (PCI DSS) certified provider. TNSLink, and end-to-end encryption product, allows retailers to connect their payment terminals to TNS’ global payments community to support multiple payment applications.
Reston, Va.-based TNS offers a portfolio of commerce products that include parking reservations, unattended payments, point-of-sale (POS) services, ATM connectivity and secure managed processing.