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Originally posted on CFCA

There is no doubt that stations across California have faced unusual times and hardships the past year or so. COVID-19 presented many challenges for owners, and it seems that the challenges may continue into the future for some time.

According to NACS, at the beginning of 2021, there were over 121,000 convenience stores selling motor fuels nationwide. California is the largest state in the country in terms of population, leading to it being the second-highest state with gas stations at over 12,000 stores. It is an incredibly diverse state when it comes to culture, ethnicity, environment and more.

California has many branded stations with many locations, but it also has a significant number of owners who manage a single or a couple of independent and unbranded locations. These independent stations are the ones who often struggle the most, and when it comes to upgrading for EMV, many feel they can’t afford it or do not understand the importance of it.

The good news is that they have affordable options. But even with a low-price tag option to update for EMV, why do it? Why would they bother with it?

Upgrading for EMV is not some aesthetic improvement or technology improvement that is not completely necessary. Upgrading for EMV is a must that has been pushed aside for a long time. The rest of the world has supported EMV for years, and the United States is one of the last counties to do so.

The main reason to support EMV is that the station will be responsible for chargebacks. Chargebacks can put an independent station out of business. Conexxus anticipates that approximately $450 million worth of counterfeit fraud will occur at outdoor payment terminals this year. Any of that fraud that happens now (as of April 17th) on a non-EMV compliant terminal will become the merchant’s responsibility.

Speaking of chargebacks, stations are now starting to get rejection notices for those chargebacks that will not be paid. Even if a station didn’t have chargebacks before, they might start getting them now if the store remains incompliant. The further we get from the deadline, the fraudsters narrow down which stations are not compliant to target them. This is happened when retail experienced the same liability shift a few years ago. As more of the branded stations upgrade, this leaves the smaller unbranded stations at an even greater risk.

If the cost of upgrading for EMV is one of the biggest concerns, then the cost of not upgrading should definitely be an even bigger concern. Would a station owner rather pay the expense upfront and prevent tarnishing their station reputation? Or would they rather spend it over months through chargebacks and fines and pay more than the upgrade cost (and in many cases significantly more — up to the entire business)? If you are going to have to upgrade anyway, you might as well do it sooner than later to avoid the chargeback liability.

So, what are the options? Some stations have stopped taking cards at the pump and make their customers come inside to pay by card. If you choose this option, you potentially lose customers who only want to pay at the pump; because most of us have become spoiled by pay at the pump. If I go to a station that does not support pay at the pump, I move on to the next station. Nobody wants to wait in a line inside the station to pay for gas.

Other stations have chosen to keep magstripe at the pump. If you do, you are still going to be liable for the chargebacks. Even those who had a video and signature of the person purchasing still lost the chargeback every time they did not have an EMV capable terminal.

The other option is to upgrade their pumps to support EMV chip cards. There are several ways to upgrade: buying new pumps, purchasing a retrofit kit from major manufacturers, or purchasing a retrofit kit from a third party. It would be best to investigate options because factors such as how old the pumps are can help drive their decision. In many cases, a retrofit is the best option due to its price.

Something to consider right now – unfortunately, with a huge number of owners waiting until the last minute to upgrade (hoping for another postponement), it has backlogged many installers. It could take months depending on the size of the job – new pumps versus retrofit kit upgrades. New pumps can shut a station down for weeks, while retrofit kits can take less than an hour per fueling point while not shutting a station down. So, it is easier for an installer to schedule a retrofit kit upgrade versus new pumps.

I have been told from industry servicers and marketers that many of the independent stations don’t even know what to do, who to call or how to handle an upgrade – and it is also difficult to reach a lot of these owners. Many are not members of the petroleum associations and don’t necessarily pay attention to industry sites and news. Word of mouth is important. Industry servicers and marketers can help station owners figure out what makes the most sense for their station. These station owners are hard workers, and we have the opportunity to prevent their station from being put out of business because of fraud. The important thing is that we are all working together to help them get it done sooner rather than later.