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EMV Compliance Initiative Slower Than Anticipated for the SMB

When the deadline for EMV compliance came and went last October, it was probably no surprise that only 40% of U.S. cardholders actually held the new chip-enabled cards in their wallet. The transition to EMV (EuroPay, MasterCard, Visa) with the October 2015 deadline was established several years ago by the U.S. credit card issuing companies in an effort to combat data security issues, as well as close the gap with Europe – the leaders in implementing credit card chip technology.

EMV is a technical standard for chip-enabled or smart payment cards, payment terminals and automated teller machines. The initiative was designed to reduce fraud, provide a higher level of comfort and security for the consumer, and ensure worldwide compatibility of card payments. Europe has been ahead of the U.S. for several years now – leading the effort for EMV and identifying fraud. 95% of European merchants – large and small – accept chip-embedded cards. Although reports are out that we are gaining momentum in the U.S., when we reached the deadline last October approximately 37% of merchants in the U.S. were EMV ready according to the payment industry management consulting firm, The Strawhecker Group.

Shift in Liability Causes Some Confusion

42% of retailers have yet to adopt EMV inside the store, even though the credit card companies' liability-shift date passed more than six months ago. This has caused some confusion for consumers since many have not even received chip-enabled cards yet from their issuing banks. According to a recent press release from MasterCard, more than two thirds (67%) of the U.S.-issued MasterCard branded consumer credit cards now feature chips. The press release went on to say the Payments Security Task Force projects that 98% of cards issued in the U.S. would feature chip technology by the end of 2017 – two plus years past the deadline they issued for themselves.

In addition, the shift in liability, the delay in credit cards being issued, and the capital expense related to funding new terminals has created another level of responsibility in a market rife with fraud. The shift in liability for the SMB is the first time businesses would have exposure for fraudulent transactions which would normally fall back on the issuing credit card company.

Liability as of October 1, 2015:
Has an EMV enabled cardHas not upgraded (still using magnetic strip device)$1,000 worth of goods purchased fraudulentlyBusiness owner is liable for consumer's $1,000 chargeback
Has a card with magnetic strip only, no chipHas an EMV enabled card reader$1,000 worth of goods purchased fraudulentlyThe bank is liable for the fraud transaction 
Has an EMV enabled card Has an EMV enabled card reader $1,000 worth of goods purchased fraudulently The bank is liable for the fraud transaction and consumer repayment as they would normally be 

Cost is a major issue, especially in the SMB market, for converting terminals and becoming EMV compliant. It is important for the SMB to avoid assuming liability as more and more consumers will be receiving their EMV enabled credit cards. This is not going away, and the liability – especially in certain areas of the country or segments of the market – are too great to ignore.

The Gas  Station/Convenience Store Segment

One segment that has a partial later compliance date is the gas station/convenience store market. Of the 154,000 c-stores in the U.S. at the end of 2014, 84% and growing are also selling fuel. The conversion at indoor POS terminals within the convenience stores was scheduled for October 2015 with the rest of the planned liability deadline, however pay-at-the-pump EMV terminal compliance is scheduled for October 2017.

The delay for gas pump terminals was based on several factors. Primarily, the higher cost for converting gas pump terminals – approximately $6,000 to $10,000 per pump – is a huge expense for some small family-owned or franchise businesses. Plus, the additional regulation surrounding having the pumps validated requires extra time. Convenience stores have the added layer of migrating ATMs within their stores as well. ATMs have a staggered shift date of October 2016.

This steep cost of multiple conversions has made some c-store owners wonder if they should invest the money. There has been a significant number of c-stores deciding to delay the EMV migration. The fraud liability is the same as the chart above and once they start receiving charge backs, they may rethink this strategy. In addition, the delayed timeline to begin accepting EMV enabled cards leaves gas stations/c-stores more exposed as fraudsters will look to find ways to skim cards where people are still relying on magnetic strips.

According to the Petroleum Marketers Association of America, fraud in the petroleum industry reached $250 million in 2014. Gas station/c-store owner holdouts may find fraudulent activity growing as the October 2017 date looms ahead and more and more of the other c-store owners convert. Finding a partner that can help with financing options and conversion for inside the c-store as well as the forecourt is important.

One option is Wayne Fueling, a global fuel dispenser manufacturer for retail and fleet applications. They have been in the fuel business since 1891 (no, that is not a typo!) and have seen their share of changes in the industry. That experience and history had Wayne Fueling ready for the EMV migration. They have a host of EMV solutions designed for compliance and security inside your store or out at the pump, and the ability to help you cost-effectively and efficiently migrate to the new world of EMV and prevent financial losses.

Next Steps for C-Stores

C-store owners need to consider not whether, but how they will migrate to EMV. Here are a few key items for your migration strategy:
  • If cost is an issue, some petrol corporations are proving to be partners by offering POS incentive programs.
  • Decide on whether to pursue an ATM upgrade, or a new model. Based on age of your current ATM a new model may be more cost effective.
  • Audit your current c-store communications infrastructure to ensure it is adequate to handle new POS technology
  • Work with vendors that can not only update current terminals, but offer retrofits irrespective of the manufacturer.
Migrating to EMV will protect c-store owners from potential fraud charge backs and will also offer a sense of security for their patrons, ultimately building customer loyalty and providing a better customer experience.


Lenders like Ascentium Capital can help you protect yourself from liability and meet EMV compliance with fast, flexible equipment financing that won't break the bank. Shift the liability back squarely on the banks, and help accelerate your customers' transition to the chip-enabled cards.

Contact us today and we'll get you dipping instead of sliding.
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