By April 17, 2021, all fuel merchants were expected to meet the EMV automated fuel dispenser (AFD) compliance deadline. The deadline came and went, with many merchants failing to comply by the due date. The inability to meet expectations is most likely a result of the major challenges COVID-19 continues to create for fuel merchants nationwide.
ACI Worldwide conducted a recent survey that looks at why the rate of compliance is lower than expected. It also provides data on the additional contactless and mobile payment options that fuel merchants are seeking.
To further discuss the results of the latest EMV deadline survey, as well as the future of payments for U.S. fuel and convenience stores and major oil and grocery/wholesale stores that sell fuel, PaymentsJournal sat down with Bobby Koscheski, Director of Solution Consulting at ACI Worldwide, and Raymond Pucci, Director of Merchant Services at Mercator Advisory Group.
The EMV AFD compliance deadline
According to a previous survey conducted by ACI Worldwide, nearly all of their target merchants (97%) will be fully EMV AFD compliant by the end of 2021, and 67% were expected to meet the deadline by April 2021. However, a new EMV deadline survey by the same experts shows that merchants have fallen a bit short of their goals.
The recent data reveals that 51% of fuel merchants did not meet the EMV AFD compliance deadline. That same survey also states that only 74% expect to be compliant by the end of 2021. While these numbers are lower than expected, merchants still appear to be making steady progress.
So, what’s causing the delay?
“We think many of the respondents underestimated the effort required to complete the rollout, as well as the impact COVID and government imposed quarantines would have on their ability to implement and test these upgrades,” said Koscheski.
Merchants are considering mobile payment options
More issuers than ever before are issuing contactless cards. As a result, more merchants have had to upgrade their payment terminals to support contactless technology.
According to data from ACI Worldwide, in 2020, contactless payments grew over 150% in the U.S. alone. About 1 out of 2 Americans are now using contactless cards as a method of payment. Whether consumers are using mobile wallets, QR codes, or contactless cards, contactless payment methods have taken off.
However, mobile payments should not be overlooked. Seventy-eight percent of fuel merchants from the same survey are considering mobile payments, which is an 8% increase from the previous survey. “But when paired with a loyalty app, and paired with tokenization, it can be an important way to increase sales,” added Koscheski.
Tokenization is widely used in mobile payments. Major mobile payment powerhouses including Apple Pay and Google Pay typically utilize tokens to represent the card data the consumer inputs. Tokens are also beneficial for subscription payments, preventing any interruption in services when card information is changed.
Point-to-point encryption (P2PE) gets the spotlight
The recent EMV deadline survey shows that 52% of respondents said they would consider P2PE compared to a mere 37% from the summer 2020 survey. “This is an area that has become much more important to merchants, especially those that have had some sort of cardholder data breach or an attack in the past,” explained Koscheski. These merchants now feel vulnerable and are looking for ways to prevent fraudulent attacks in the future.
While P2PE has been offered in-store for quite a while, it is fairly new at the pump. The adoption of P2PE at the pump is increasing steadily as technology providers show a growing sense of support in this market. ACI is working with Dover, Gilbarco, Invenco, and other outdoor payment terminals to increase the capabilities to support P2PE at the pump.
Pucci believes that fuel merchants are opening their eyes to these new capabilities because of the threat of fraud. “Fuel merchants are huddling with payments providers to understand the different layers of security protection against fraud. So we’ll be finding that’s a very favorable development for fuel merchants to be able to add more security for payment transactions.”
Advice for merchants
Bobby Koscheski of ACI Worldwide has some excellent advice for merchants who are looking to protect sensitive data and gain some of the benefits of P2PE: “Merchants will do their homework on what their customers expect, and those that do not innovate and keep up with the times could face indifference from their customers, or worse, lose market share to competitors who are innovating and changing with the times.”
Focusing on contactless payments alone, a recent PYMNTS study for grocery found that 25% of consumers would be willing to switch grocers if it meant having access to better touchless payment options, a behavior driven by the global pandemic. This puts into perspective the importance of providing the most up-to-date options to enhance the customer experience.
For fuel merchants, ACI Worldwide believes it’s about giving the consumer a good reason to turn left into a station when they could more easily turn right into the competitor’s station across the street. Once the customer is on the property of the business, it is important to entice them to enter the store to make a purchase or place an advance order for curbside delivery while they fill up their tanks.
“Consumers are used to seeing the mobile payments, contactless payments, and the advancements in the payment transaction,” explained Pucci. “They’re seeing it with their favorite QSRs, as well as retail stores. So they’re going to be looking for it.”
