Why You Shouldn't Use Your Credit Card at Gas Stations
Just before this year’s Fourth of July celebrations, the Secret Service officially released a warning urging people to reconsider paying at the pump for gas while traveling. It started as part of a new initiative to protect U.S. consumers against growing fraudulent credit card activity, after a Memorial Day inspection revealed over 70 skimmers at local gas stations.
Gas stations are one of the last retailers to incorporate EMV technology into their point-of-sale (POS) systems, leaving their terminals more vulnerable to theft. In December of 2016, Visa adjusted its EMV acceptance deadline from 2017 to October 2020 for all fuel stations to adapt this technology. This delayed the shift even further. However, the labor and costs associated with the updates can be extensive, which explains why thousands of gas stations haven’t begun the transition yet.
Outside of the petroleum industry, other U.S. retailers have been adopting EMV technology (otherwise known as the chip card) exponentially every year. EMV cards contain an embedded microchip which provides an extra layer of security on consumer data. Every time an EMV card is used for payment, the chip (unlike magnetic strips) creates a unique transaction code that cannot be replicated. Implementing EMV technology as part of payment acceptance helps to achieve Payment Card Industry (PCI) compliance and the overall security of payment data.
Chip reader terminals at gas station POS systems reduce counterfeit fraud because they prevent skimming devices from being effective. Credit card skimmers have been increasingly installed by hackers on gas station terminals nationwide, and there have been efforts to warn those traveling on the road for long periods of time. A solution to this frequent hacking is to replace current terminals at gas stations with EMV capable technology, because even if a chip card is run through a skimmer, the data cannot be replicated.
That being said, the transition is easier said than done. The cost of migration to EMV cards in the U.S. (for all retailers) was originally estimated to be $5 to $8 billion, however, W. Capra Consulting has estimated the total cost for conversion of gas terminals in the U.S. could be up to $6 billion alone. A single EMV replacement retrofit kit can cost $5,000 or more, but incorporating EMV technology can significantly reduce and prevent gas pump skimmers from costing gas station owners the losses associated with fraudulent activity.
Gas station owners are now encouraging customers to prepay for gas inside, or jiggle the card reader to detect for skimmers - but they shouldn’t have to. Gas is the main essential of transportation, and unfortunately criminal actors realize that. If implemented successfully, EMV technology at gas stations has the potential to reduce counterfeit fraud by a high percentage, as EMV technology in general has reduced counterfeit fraud by 70 percent. As the EMV deadline approaches for the petroleum industry, set for October 2020, you can (hopefully) expect to see increased adoption among gas stations.