Gas stations face expensive card reader deadline

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By Russ and Tiña De Maris

Planning on “sliding” your credit card when filling up your RV? That won’t last long, as Visa and Mastercard have drawn a line in the sand with gas stations across the country. Come October, all gas pumps that take credit and debit cards will need to accept “chip” cards. Those that don’t will be liable for any fraudulent card transactions. It’s a demand that’s thrown the convenience store industry into a complete tizzy.

This isn’t a new issue – other businesses that do card transactions have for the most part already made the change. But fuel sellers have been dragging their feet, and have managed to pull delays from the credit card industry – until now. Caught with their fuel hoses in a knot, gas retailers are going to find it hard to meet the mandate on time, as with so little time to make the change remaining, there aren’t enough technicians to perform the work, and not enough equipment in inventory to make the changeover.

Just how many gas retailers need to make the change? Last year, only about 30 percent of those responding to a survey said they’d upgraded their pumps to the new EMV chip technology. It’s an expensive changeover to be sure, but the costs of paying for fraudulent transactions needs to be weighed in the thinking. Projections from the credit card industry suggest a fuel station that doesn’t make the change, but bears the cost of fraud on its own, could be in deep. With the industry seeing an estimated $451 million in fraud transactions in 2020, a gas station could easily see $201,000 in fraudulent transactions over the next seven years. The cost of converting a gas pump to a chip-reading system is said to run $6,000 to $10,000 per pump.

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Snayte
6 months ago

I have been to only one gas station that had chip readers working. I had to insert my card into the same slot as always but leave it there. Now the mag strip passed all the way into the reader so isn’t that still susceptible to skimming?

Reh
6 months ago

Cant beat the chip cards . you have to use a pass code every time you use it so it is harder for the crooks. We have had that system in Canada for over 10 years now , It can still be tampered but not as easy. All card units are chip not just gas stations. When you go into a bank you have to put your card in so they know who you are.

Snayte
6 months ago
Reply to  Reh

You are referring to chip and PIN which is more secure and is not what the US is going to. It is chip only here.

Bob C
6 months ago

How does one find the stations that have already converted. You can’t ask the attendants as they say what they think you want to hear (ask me how I know). The very new pumps that have been installed have telltale signs. But if an older pump has been converted then what. The only thing I have read is the card will have to be insert horizontally rather than vertically. But does that go for the older pumps also?

Wolfe
6 months ago
Reply to  Bob C

Chip readers are either electrical-contact readers that electronically connect to the chip very similarly to how a USB key connects to your computer (see the patch of contacts on your card?). With these, you insert the card and LEAVE IT until told to remove it. The second kind of chip reader (NFC) is fully wireless — you wave the card over a panel, the same as RFID keycard readers work when letting you into a gym or workplace — you don’t insert the card at all. So, “leave/wait/remove” or “wave past” are OK.

The older/insecure card scanners use the magnetic stripe on your card, and are read by moving the card past a magnetic head just like your old reel-to-reel. If the card isn’t moving, it’s not reading. They are prone to skimming because crooks can add a very small SECOND scanning head to the faceplate of the pump, and thus read the card themself on the way into the pump’s reader. Their device doesn’t interfere with the pump doing it’s thing as always, and they collect their device later (which has stored your card scans). If you “stab” your card into the slot, it’s this older and less secure reader.

Dave W
6 months ago

Up here in Canada we’ve had chip card readers for several years. U.S. vendors are way behind the times with this technology. However during our recent Florida trip we noticed that more pumps accepted our chip card than on past visits.

Billy Bob Thorton
6 months ago
Reply to  Dave W

Why is your gasoline through the roof in your country, when Alberta produces an enormous amount of oil. More than Canada consumes. Oh yeah, its the oppressive tax structure. Great you have chip readers, try working on your creep into socialism more, and you would be amazed on what Canada can become.

Golfnut
6 months ago
Reply to  Dave W

In all fairness, Canada’s population is the size of California and managing the complexity of outside pump terminals is easier due to the volume of pumps. The issues of migrating to chip technology are monstrous. This effort has been ongoing in the US since 2014 or so. Lots of issues, costly as well as logistics. Hopefully we will see a huge increase in chip readers in the coming months.

Wolfe
6 months ago

Stop the mathematical ignorance!!

The card companies mandate a change that the gas station pays for. Let’s say 8 pumps, $80,000 to upgrade. Guaranteed 80K loss to each station. If they DON’T upgrade, they MAY (?) be unlucky enough to lose a couple K before it’s discovered and fixed (skimming is done by a physical device; preventing skimming is done by credit companies only honoring chip reader transactions). I say MAY because MASSIVELY most pumps aren’t attacked. I’d like to see the figures for the cost to upgrade ALL pumps vs fraud from not upgrading ANY. I’d bet the per-pump balance would be obscene.

Golfnut
6 months ago
Reply to  Wolfe

Don’t want to get into a debate here, but I have seen a single station receive over $100,000 of fraud in a single month. Magnetic Stripe technology is 50 years old and contains static data. Chip technology, although far from fraud-proof is dynamic and far superior for preventing fraud. An independent station operator can not sustain losses if he doesn’t convert or risk the chances of a compromise and financial liability. Skimming fraud is estimated in the several hundred millions of dollars. The bottom line is if an operator doesn’t convert to chip by October of this year, they will be liable and charges back. Devastating to their business, reputation and sustainability.

Wolfe
6 months ago
Reply to  Golfnut

I understand the technology quite well (see above), but you may be confused as to the liability. The gas station doesn’t “see fraud” per se — they don’t get cheated because their pumps work as well as ever. What happens is that as an easy place to plant a skimmer device, the credit card companies get runs of fraud purchases elsewhere. Because the station has an agreement with the credit company (to pay 2% on every fillup, etc), the credit company will drop stations that expose them to higher liability.

If I owned a station myself (I don’t, although I swear I buy gas by the tanker anyway lately), I’d examine my pumps daily for skim devices (it’s not hard), and if credit companies wanted to play hardball, I’d offer cash discounts to customers and tell the credit cards where to stick their mandatory upgrade policy (dump pay-at-pump and take chip cards inside for customers who insist) — but that’s my philosophy of REALLY resenting people telling me how to run my business.

Bill P
6 months ago

I always go inside to pay when we fuel. (My wife has to pee anyway, so there’s plenty of time) and I have my card set to push notifications every time it’s used. Too many friends have had their cards skimmed and while the banks have generally been pretty good about it, getting a new card when you’re on the road is time consuming and a pain in the butt.

Bob Godfrey
6 months ago

I’ve been to several gas stations recently that have the chip reader mechanisms installed but they are not hooked up ………… not very helpful.

Golfnut
6 months ago
Reply to  Bob Godfrey

Bob – it gets complicated, but you will see lots of chip sites coming on before the October deadline, and there will be stragglers but they will act quickly when the liability shifts to the service station. Equipment could be installed and they are waiting for the software to run on the company’s system. There are a lot of variables behind the simple swipe at the pump. Credit card transaction alerts, monitoring your card activity and other precautions will limit your risk. Criminals are vigilant and will steal one way or another since the vast majority of this activity is organized crime from Russia, Ukraine, Armenian groups, Cuban and Mexican cartels.

Golfnut
6 months ago

This will definitely reduce fraudulent transactions at the pump, however be aware that this fraud will shift to “card not present” transactions (online sales), where chip technology is not used. Historically this has happened recently in Canada and other countries. Having worked with the USSS on counterfeit fraud, be aware this is most prevalent in CA, FL and Texas which makes up almost 50% of skimming fraud in the US. As mentioned in the article the demand of technicians required for over 1.5m pumps is the main reason the oil industry is the last sector to adopt chip at outside terminals. They want this as much as we do. You can always go inside and pay for your fuel, since all inside terminals are chip capable. Hope this helps.

Fox
6 months ago

It’s about time

Scooter
6 months ago

I can see this going another way. Just like the truck stops have been doing for some time, charging higher prices for credit than cash or debit.

Tommy Molnar
6 months ago
Reply to  Scooter

Most already do, in my experience.

Ron
6 months ago
Reply to  Scooter

All of the stations (including the big boys) in our town charges 8 cents per gallon for credit card usage and a flat 35 cents for debit cards.

friz
6 months ago

Maybe we reside in Oz but I can’t recall a machine which didn’t accept the chip. In my experience, chip readers are pretty universal.

John R Crawford
6 months ago
Reply to  friz

They are universal but the one that has responsibility for fraud is going to change.

Dan
6 months ago
Reply to  friz

our local gas station just recently installed new pumps with the new readers. However they went from 6 pumps to 4.

Will B.
6 months ago

Good deal. Should minimize skimmers, I’m hoping.

Bob p
6 months ago
Reply to  Will B.

The chip card is the worst security issue in the credit card industry. With the old magnetic strip a thief actually had to have the card in their hand, with the new chip cards all the thief needs is a $25 code scanner and be within 20 feet of you to read all the info on the card. Then get a blank card and program all your info onto that card and bingo you have an identical twin with the same name,address, and financial info.

Darrel
6 months ago
Reply to  Bob p

EMV cards contain a computer chip that functions as a miniature processor and transmitter. Unlike traditional magstripe credit cards, the information contained on these chips is dynamic. Each new transaction produces a new, unique transaction code (also known as a “token”) using the principles of cryptography

No two transaction codes are ever repeated, so each code becomes useless following the completion of the transaction it represents. Were a sophisticated thief to steal a particular code from a particular point of sale, the code would have no value at any point in the future, with or without the card that created it.

There are big problems with certain cards, but radio-frequency ID theft is not a problem with new EMV cards.

https://www.mybanktracker.com/news/chip-cards-safe-from-wireless-thieves

WEB
6 months ago
Reply to  Bob p

You are confusing the chip with RFID technology. A chip reader requires the chip inserted AND a four digit passcode entered to approve the purchase.
Telling people that the RFID on a card can be read “within 20 feet” is a whole pile of baloney…. go pass your false information off on some other website please. With your way, you could be at the cashier (with a contactless card reader) and the three people behind you will have their cards fighting to pay for your purchase!! That would be sweet, eh?
I went to my bank and got a new debit card with the ‘contactless’ (RFID) feature disabled, it has to be chip inserted and passcode entered for every purchase, I gave up the ‘tap’ convenience for peace of mind. 🙂