Conversations, whenever and wherever c-store retailers, payment processors, issuers and service providers are brought together for a discussion on the current and future state of the payments landscape, move quickly to EMV (Europay, MasterCard and Visa) readiness despite all the vision and opportunities in front of them with alternative payments.
Visa, MasterCard, and other card brands are moving to a chip-based payments infrastructure in the U.S., one of the last countries to migrate to EMV chip technology. By some estimates over 50% of all credit and debit cards will have an EMV chip by the end of 2015. Beginning on October 1, 2015 the financial liability for counterfeit card payment fraud shifts to the party that is the least compliant; likely the c-store operator.
There is a real challenge in meeting this date given the lack of readiness of processors and point-of-sale (POS) software providers. Stakeholders are working to bring solutions to retailers but it is becoming increasingly apparent that the shift in liability date will come and go, leaving many c-store retailers in a position of not having fully implemented a complete EMV solution in their stores.
Being the least compliant is the key to who accepts the burden of liability for fraudulent card use and all indicators are that retailers of all sizes and channels will see an increase in chargebacks. In the face of these increased chargebacks and consumer expectations set by the card brands, retailers need to have a solid plan in place to take steps now, plan for what’s next, and leverage opportunities that can come from being proactive with the implementation of EMV.
To minimize the impacts to your customers, your businesses, along with other impacts operators need to have solid plans in place. Being proactive, with a roadmap, will be critical to a successful implementation of EMV solutions.
C-store retailers need to think proactively about EMV by considering these and other realities while developing a solid and proactive plan:
Your chargebacks will increase—have you asked your processor or fuel brand partner what your exposure will be with the liability shift?
Customers will be asking questions whether you have new EMV-enabled terminals or not. How will your cashiers respond?
POS providers are developing software. When will your POS partner be ready and what other features and functions can you take advantage of to gain operational improvements?
EMV requires a financial investment. Have you taken a comprehensive look at your POS and retail systems, considering short and long term opportunities?
There are initial steps that can be taken. Which make sense for your company?
At a recent gathering where some of my colleagues led a discussion with C-level executives and owners from the Convenience/Petroleum industry, most were not fully aware of EMV, but all left knowing that EMV is a key component of moving ahead on the payments front. They were advised to think about an EMV initiative as you would all other projects—create awareness, engage your team, work with partners to develop and deliver a solid on-going plan.
According to many involved in the EMV conversation the investments required are difficult to find a return on. Additionally, EMV is not a complete solution to cardholder security which you should keep in mind as you make choices in early-on updates; be sure future payment security capabilities such as end-to-end encryption and tokenization can be easily and economically added. As you consider the budget for data security keep in mind both near and longer term spends.
Pat Pape, contributing editor for CSD, has written a series of articles on EMV in recent editions. In May and June she highlighted the decisions that Mirabito Fuel of Binghamton, N.Y., operators of 75 c-stores have recently made in the face of EMV. The reality is they have put a best practice of retail systems implementations to work – gaining multiple benefits early on from their investments. Mirabato looked beyond EMV and found ways to leverage and maximize their investment by improving their customer’s experience with new Point of Sale systems and improved functionality with their loyalty program.
The payments dialogue will continue amongst c-store/petroleum retailers for an even longer period of time since October 2017 is the date set when liability will shift for card payment transactions at Automated Fuel Dispensers.
In addition, alternative payments will evolve and become mainstream, while security features will continue to improve and likely be mandated. At the upcoming 2015 NAG-Convenience Conference I’ll be leading a session on “How to Boost Profitability by Reducing Swipe Fees” – in the face of new costs associated with card payments we’ll have an opportunity to hear of ways to reduce operating costs and improve existing and future investments. Let’s continue to learn from one another.
Ed Collupy, executive consultant at W. Capra Consulting Group can be reached at [email protected]. He recently joined W. Capra after 18 years at The Pantry Inc. prior to its merger with Couche-Tard. At The Pantry, Collupy served as vice president of the IT leadership team and most recently directed and supported all of The Pantry retail systems for store operations, merchandising and the fuel teams.