Long live the credit card magnetic stripe! You won’t need those chip cards at gas stations for a looonggg time.
The march towards protecting consumers from credit and debit fraud with newfangled chip cards is slow, but steady. How slow became apparent on Thursday, when Visa and Mastercard announced they were giving gas stations an extra three years to comply with new liability rules that essentially force merchants to upgrade their terminals and refuse magnetic stripe payments. Gas stations already enjoyed a grace period over other merchants – their deadline was to be in 2017, two years after last year’s 2015 deadline for most merchants. But Visa and MasterCard announced Thursday they were giving station operators another three years to install chip readers in gas pumps.
There’s good reason for this: Gas station operators generally have to “break concrete” in order to upgrade pumps to accept chips. Replacements can cost $30,000, far more than to $1,000 or so that other retailers paid to upgrade their point of sale terminals. There’s also not enough smart chip card pumps to go around, apparently.
“The fuel segment has its own unique challenges, which we recognized when we first set the chip activation date,” Visa said on its website.”We knew that the … segment would need more time to upgrade to chip because of the complicated infrastructure and specialized technology required for fuel pumps. For instance, in some cases, older pumps may need to be replaced before adding chip readers, requiring specialized vendors and breaking into concrete. Furthermore, five years after announcing our liability shift, there are still issues with a sufficient supply of regulatory-compliant EMV hardware and software to enable most upgrades by 2017.”
In the announcement, the credit card associations stressed the slow and steady march of chip-payment-ready merchants across the country.
“There has been great progress with EMV migration in the U.S. to date,” Visa said. “More than 1.7 million merchants representing more than a third of storefronts are now accepting chip cards; 388 million Visa chip cards have been issued in the U.S., and we are already seeing a 43 percent reduction of counterfeit fraud at chip-enabled merchants.”
The EMV migration has been marred by fits and starts, however. Consumers have complained that chip payments take longer at checkout than mag stripe transactions. Thousands of merchants still haven’t turned on their chip-enabled terminals because there was a huge backlog in bank certifications required. (Some have sued over this issue.)
Changing a money system is no small task.
It’s important to note that as long as any magnetic stripe payments are accepted in the U.S., the switch to chip cards suffers from a major vulnerability. It means stolen credit card data can still be written to counterfeit magnetic stripe cards and used for ripoffs. In other words, counterfeit card fraud lives on: Card account information can still be used to swipe and steal gas.
Of course, there’s another reason magnetic stripes still matter: Despite an October 2016 deadline for ATM operators to convert to chips, you’ll be hard-pressed to find ANY chip-ready ATMs across America.
Still, the payments industry sees progress.
“The unique challenges facing the retail petroleum industry in upgrading their outside pay-at-the-pump systems to EMV have been an active part of the EMV migration discussions over the last year within the U.S. Payments Forum and its Petroleum Working Committee,” said Randy Vanderhoof, director of the U.S. Payments Forum. “Given the migration challenges for implementing EMV in the petroleum environment, Visa’s and Mastercard’s modification of the liability shift dates will be beneficial to the retail petroleum industry and the U.S. chip migration.”
If you’ve read this far, perhaps you’d like to support what I do. That’s easy. Sign up for my free email list, or click on an advertisement, or just share the story.
| Tweet this story |
Follow @RedTapeChron |
“in some cases, older pumps may need to be replaced before adding chip readers, requiring specialized vendors and breaking into concrete”
But in most cases likely not…
I find it highly implausible that the art of transmitting data into and out of a pump is any different power and signal wise for swipe or chip/NFC transactions.
I find it also highly unlikely that the physical conversion could not be accomplished with a new enhanced plug and play payment module.
The software solution is exceptionally scalable, so it doesn’t make sense that it can’t be bolted onto the existing systems.
Seems to me that big oil is trying to avoid CAPEX for upgrades while pressuring the card networks to eat the costs of fraud.
Just as in extraction and refining, big oil privatizes the profits (CAPEX savings) and socializes the costs.
I might also add that the banks and ATM operators are fiddling while the fraud flames burn higher by trying to develop their own Bluetooth and QC code based authentication systems instead of jumping on the NFC/mobile authentication band wagon.
Two weeks ago I posted a comment on your blog but it disappeared. In that post I asked if anyone else was having problems with their Verizon phones. The micro failures that have plagued both of our phones in the past 6 months have been so frequent it would take a several pages to list them all. Thing is that when a particular function fails it only takes 3-5 days for it to return. As you know these phones are horribly expensive. My phone is less than 3 years old. I expected a $600 phone to last for 5 years and maybe more.
At 67 I do not hang out with folks who give a damn about the color or make of my cell phone. We all just expect that when we pay for an expensive phone and $200 a month to Verizon that everything will work. We are way past the Beta stage but the Verizon techs tell me that I just need to buy a new phone and my problems will be solved.
What makes my problem more acute is that I have MS and my immune system has collapsed. I have to be able to communicate anytime, from any place. I also need to do searches on the signs and symptoms of my diseases and the medications I have to take. All of which have to be conducted on line or using my phone.
ALSO, I still have questions about how Verizon meters its broadband. After your article about Verizon charges I called Verizon several about the metering of my broadband. Although they “gave” me 24 GB at the same price we still were getting dinged because we would use our allotment 5 days or so before the count starts over. We seldom use Skype or stream video.
In September I called Verizon. During the hour I was talking to the Verizon rep I had my computer and MiFi device on. I was not streaming or doing any searches while we were talking but during the hour we were on the phone I lost 1GB of broadband. The rep had no idea how that happened and said she would look into it – never heard from her again.
We have used Verizon broadband for 8 years and did not experience an overage until this last year. Two days ago (afternoon of 11/30) I got a notice that I had 10% remaining on my Broadband. I switched off my computer and the MiFi dongle and went to bed. The next morning I found that we had no GB left. The message said that we would be switched off unless we paid another $25.
Got any ideas?
Thanks for the work you are doing. It is going to get a lot worse with the new Republican group that is now in power.
Michael Springer