What Does The 2020 EMV Date Extension Mean For Your Dealers?
Despite the extension from 2017 to 2020, waiting three years to add EMV to your pumps may not be your best option
By Chris Santy, President, Patriot Capital
Published in Below the Line Club, January 2017
When Visa, MasterCard, and American Express announced the extension of the EMV forecourt liability shift from 2017 to 2020, there were two similar reactions from different camps in the industry for vastly different reasons.
- Smiles from fuel marketers who’ve already updated the majority of their sites and who see the extension as an opportunity to differentiate, and get a better ROI on that investment.
- Cheers from marketers who expected the date to be pushed back, and don’t plan to do anything for another three years.
Clearly, this news calls for an evaluation of your strategy, and careful consideration of whether this change could create an opportunity - or liability - for your business. Upgrading gas pumps for EMV is a big investment that deserves careful study.
Determining the best time to upgrade requires taking into account a number of important factors. Here are six important questions to consider:
1. When will your payment network be ready to process EMV transactions?
- Network upgrades probably will not slow down significantly as a result of the date shift. Most networks have reported that they plan to be ready before or near the original October 2017, deadline, so it is a good assumption that most networks will be processing EMV by January 2018.
2. What are your competitors doing?
- At least two years of record gas pump shipments have kept pump manufacturers busy. Big-box retailers and own-brand fuel retailers are responsible for much of this growth, upgrading to enhance the customer experience with TV at the pump, enabling contactless payments, loyalty programs, and preparing for EMV. How does the fueling experience at your site compare to the experience across the street?
3. Are you in a high-fraud area?
- The card companies warn that retailers who experience ‘excessive’ fraud rates will be subject to counterfeit fraud chargebacks, which may mute the impact of the date shift. Understanding your current fraud profile and potential financial risk will help in evaluating your exposure.
4. How old are your pumps?
- If your pumps are relatively new, or fairly old, your upgrade decision has been fairly easy – a card reader if new, and new pumps if old. If your pumps are middle-aged (5 to 8 years old) and in good health, waiting a few years and upgrading to new pumps may be better than retrofitting today.
5. How security-conscious are your customers?
- Even with the liability date shift factored in, estimates indicate that half of the gas pumps in the U.S. will be accepting EMV payment by the end of 2018. Because customers have been using EMV for most of their other retail and restaurant transactions, they are very aware of the security benefits EMV provides. Will your customers seek out ‘safer’ EMV fueling sites if you don’t provide this benefit?
6. How will inflation impact your costs?
- The date extension will take pressure off of technician capacity and pump manufacturers in 2017. This pressure will return in 2019 and 2020, potentially driving up prices on both labor and equipment. Interest rates and general market inflation are also forecast to increase in the near future.
Shelving the investment in upgrading your gas pumps until 2020 without doing your homework may cost you in both fraud chargebacks and market share. Understanding all the important considerations, and having a clear marketing strategy for your site and your customers will help you make the right decision for your business.