Do You Understand Your C-Store’s EMV Exposure? Why upgrading your Gas Pumps Can Make you Money


Richard Browne, Vice-President Marketing, Patriot Capital
As convenience store owners and other retailers have adopted EMV inside, there have been several benefits to their businesses including state-of-the-art equipment, stronger customer security and much more.  With the addition of EMV, many C-Stores have also added mobile payment or tap and pay along with the simplified handling of loyalty programs and special offers, creating a much more robust customer experience.  In addition to these customer conveniences, EMV has provided improved payment security to prevent credit card skimming scams and reduced fraud inside the store.
‘Crooks have got to eat’
There has been an anticipated, and undesirable, side effect for crooks and scammers.  As inside payments become more secure, not just at gas stations but across all retail formats, the crooks that made their living with in-store credit or debit card fraud have to find new ways to make an income.  An estimated 30 million magnetic stripe payment terminals are now secured with EMV payment technology, leaving only the nations roughly 120,000 gas stations as a last non EMV payment point.  This is compounded by most of the world already having moved to EMV for gas and in-store purchases.  The bad guys are losing locations to ply their trade at and are rapidly moving to gas pumps to do their work.
Indoor payment fraud was a significant expense for payment networks. Some networks found themselves running into hundreds of thousands of dollars a month of fraud, which can be catastrophic for smaller business.  Multiple retailers are reporting that indoor credit and debit card fraud is dropping rapidly as they’ve adopted EMV for better security measures to protect their brand and their customers.  Retailers and law enforcement officers are also confirming that payment fraud is moving outdoors to gas pumps.  Additionally, the increasing sophistication and availability of skimmers continues, which is an ongoing battle for all gas station owners.  In high fraud markets across the south, the west coast and parts of the northeast, skimmer fraud continues to grow.
During 2018 and the first part of 2019, we’ll see a continued expansion of the number of sites offering secure EMV payment. Currently, there are two large chains processing EMV at the pump, with others in a trial.  As more networks switch EMV on, the fraud will migrate to the remaining sites. With an estimated 50% of pumps being EMV enabled at the end of 2018, the speed with which EMV at the pump will rollout will be rapid on those networks that are close to being ready.
Pump payment fraud is an expense that has, in most cases, been absorbed by either the brand or payment network.  The industry is getting clear messaging that this liability will shift downstream to the jobber and/or dealer in October 2020, or sooner.  Based on industry norms, this fraud could currently be several thousand dollars per site, a number that is higher in high fraud markets and likely to grow as fraud continues to go to the least secure sites.
 Why should I upgrade EMV now?
There are 3 reasons to upgrade your pumps in 2018 rather than waiting until 2020 or later.
Firstly, if your site is a victim of fraud prior to you being liable for the fraud, you still run the risk of losing customers due to bad public relations as the media and your customers learn of a payment fraud incident. This lost business will be tough to recapture as it can take years to acquire that brand loyalty.
Secondly, as your competitors offer secure EMV payments on their gas pumps, security conscious customers will move from your convenience store to one they perceive as secure.  These lost gallons and inside sales will also be tough to recapture.
Lastly, technicians, equipment and borrowing costs will likely be more expensive in 2020.  Factors such as the tariffs and interest rate hikes being introduced by Washington will have a significant impact on overall costs.  Technicians will be fully occupied, resulting in price premiums and the use of overtime to cover the high demand that’s coming.
To calculate the incremental profit your business could capture today rather than waiting, the ‘How Much Will Waiting Cost’ calculator allows to you put your site-specific information in and see what your return could be. Click Here to find out how much waiting will cost your business.

If you want to learn more, or are in need of a gas pump, POS or other C-store equipment financing, please contact us at 1-404-975-1974


State Bank and Trust Company d/b/a Patriot Capital does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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