Potential delays aside, gas EMV is coming. And it's expensive.

With the EMV liability shift date for automated fuel dispensers (AFD) looming, subject to any last-minute changes, we are seeing major changes at fuel sites across the USA. With close to 150,000 active fuel sites in the U.S. alone, there are a huge number of individual pumps that will need to be upgraded to accept chip and PIN cards.

A recent article by Visa says that only a third of sites have so far upgraded, with only months remaining to do so, before liability shifts.

The benefits of installing chip card technology have been well documented. From a technical standpoint, the option of accepting chip and PIN card payments sets the basis for several advances, such as mobile and biometric payments, which are clearly where the fuel payments market is heading, especially for the lower-value purchases. EMV or chip and PIN technology also reduce the likelihood of counterfeit fraud by a significant degree due to the complexity of the chip technology.

Whilst EMV has been the de facto standard across Europe and other regions for many years now, it has only started to see real traction in the United States more recently, with close to 2 million merchants now accepting chip cards for purchases.

The fuel industry is typically slow to integrate new technology, particularly at the pump. Changing fuel pumps is not cheap or as easy as changing a till system, and typically fuel payment fraud rates have been low – accounting for just 1.3% of total payment fraud in the U.S. Despite this, the 50,000 fuel sites that have already changed over to EMV acceptance have already reported noticeable reductions in counterfeit frauds, which can only be good news. With fraud rates dropping by over 50%, not just for counterfeit fraud, but also for fraud committed on lost and stolen cards.

However, there is a downside to EMV. EMV acceptance in fuel payments does not offer a silver bullet for what is commonly acknowledged as being a growing market for fraudsters. With an almost 160% increase in the number of skimming devices found on fuel pumps, and costing the fuel industry in the U.S. an estimated $500 million dollars, this is only growing as fuel prices increase – making the end product far more valuable.

While there is a deadline for switching over to EMV acceptance, this deadline is for fraud responsibility and liability for the costs, not for the physical changes. Currently the lowest cost of a pump upgrade is $25,000. This is much more affordable to larger corporations who own multiple sites across the U.S. and even internationally, the problem is that close to 80% of the U.S. fuel site market is owned by independents – colloquially referred to as mom-and-pop gas stations.

Estimates in 2018 claimed that one of these independently owned sites make an average of $40,000 a year in profit. Uprading pumps takes a considerable amount of that profit away, especially if fuel sales is the owner’s primary income.