O’Brien said the people who are compelled to act are major companies that have risk exposure in the hundreds of thousands of dollars and much more. For those retailers that are affiliated with a major oil brand, typically there is a brand-specific payment processing package that the retailer must be connected with—and if this package requires EMV compliance, then the retailer will be compelled to upgrade.
“It is conceivable that some retailers will only make the EMV upgrade for the payment terminals inside the store, and offer mobile payment options at the dispenser,” O’Brien said.
Costs Involved
As it pertains to retailers and consumers, EMV is not just about chip cards, it’s about the ability to bring a modern, multifaceted and highly secure payment infrastructure to the U.S. marketplace.
However, there’s no question about it: EMV compliance is going to be expensive.
“The overall spend is going to be something that puts a lot of pressure on smaller dealers and even become something of a significant challenge for larger retailers and marketers,” said Chris Santy, managing director and president of Patriot Capital Corporation. “I don’t think that anybody but the very biggest of the big companies in our industry is going to be able to look at this and not come up with a strategic plan for how they are going to address the capital side.” Patriot Capital has been delivering fast and affordable financing solutions to the convenience store and commercial petroleum industry since October 2000.
The cost challenge will be comparable to PCI—less impactful in some areas but more so in others. “If you compare PCI to inside EMV–the point-of-sale portion–PCI was much more of a mandate,” Santy said. “Secondly, the major oils have offered much greater subsidies than they ever did for PCI compliance. The real challenge will take place at the forecourt–the pumps. A POS upgrade might be $10,000 while four or five pumps might be $75,000 or $80,000.”
Luckily retailers have options in terms of complying with the requirements.
Certain newer dispensers have the capability to be retrofitted but many will need to be fully replaced. Site owners should consider the lifespan of their equipment and capabilities of various upgrade kit options in order to avoid regret spend from equipment upgrade limitations on older equipment. The key thing is for retailers to conduct an age assessment of their dispenser and POS terminals. This may help determine which upgrades will have to take place.
“Retailers need to contact their pump and systems providers now and begin specifying, planning and estimating their upgrade,” Anderson said. “”When prioritizing what stores to upgrade first, look at the most fraud prone stores as the first tier of stores to be upgraded. With interest rates predicted to go up, it also makes sense to start looking for financing now while rates are at an all-time low.”
Systems upgrades can cost around $20,000 to $30,000 per site in equipment. New dispensers can cost up to $80,000.
“Beyond the cost of new equipment or equipment upgrades, there are added implementation costs,” Anderson said. “For example, usually two site visits are needed, with a store down three to five days—not selling fuel. EMV requires much more data capability than MSR and oftentimes new island communications lines are needed to be installed, which means new conduits need to be installed and soil testing is required when concrete is broken apart. An estimated industry cost is over $3 billion, plus lost sales.”
Both retrofitting and installing new dispensers are also options for retailers. Although there are a few retrofit options for retailers, Anderson said many retailers are making the decision to purchase new dispensers with the new readers included.
“It really is up to each retailer to decide what makes the most sense for their company—with the goal of maximizing value,” Anderson said.
Some retailers may decide to only accept cash, perhaps at selected sites. Similarly, as O’Brien touched on previously, while the market penetration is still developing mobile commerce such as that facilitated by P97 can allow the acceptance of credit through mobile devices where the mobile service provider provides the secure connection and assumes liability.
O’Brien stressed that the costs for implementing EMV will vary widely.
“An individual that takes credit cards for a personal business can get a device for under $500, but fuel retailers and c-store operators can’t take this inexpensive option, because they need to have their credit card processing tied in with the software system for inventory control,” O’Brien said. “So an upgrade of equipment can run from $2.500 to $7,500 for a single site and then it gets to be much more of a serious investment if the decision is made to upgrade equipment at the fuel dispenser island.”
