The Mastercard and Visa decisions to move the liability shiftfor EMV migration at the fuel pump from October 2017 to October2020 created an additional fraud-concern period for credit unions.

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“The unique challenges facing the retail petroleum industry inupgrading their outside pay-at-the-pump systems to EMV have been anactive part of the EMV migration discussions over the last yearwithin the U.S. Payments Forum and its Petroleum WorkingCommittee,” Randy Vanderhoof, director of the U.S. Payments Forum,said. “Given the migration challenges for implementing EMV in thepetroleum environment, Visa's and Mastercard's modification of theliability shift dates will be beneficial to the retail petroleumindustry and the U.S. chip migration.”

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In its announcement, Mastercard said, “EMV compliance for fuelmerchants with Automatic Fuel Dispensers brings significantregulatory and implementation challenges. Over the past months, wehave had extensive discussions with fuel merchants, issuers,acquirers and other stakeholders regarding these uniquechallenges.”

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In its statement Visa acknowledged, “The fuel segment has itsown unique challenges, which we recognized when we first set thechip activation date for automated fuel dispensers/pumps two yearsafter regular in-store locations. We knew that the AFD segmentwould need more time to upgrade to chip because of the complicatedinfrastructure and specialized technology required for fuelpumps.”

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Visa acknowledged there has been great progress with EMV migration in the U.S. More than 1.7 millionmerchants representing more than a third of storefronts now acceptchip cards; with 388 million Visa chip cards issued. “We arealready seeing a 43% reduction of counterfeit fraud at chip-enabledmerchants.”

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The Visa statement added, “An important element of our study hasbeen that fraud rates at fuel pumps are relatively low,approximately 1.3 percent of total U.S. payment fraud.”

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Nevertheless, fraud at the pump is a concern.

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Rancho Cucamonga, Calif.-based fintech and payments companyCO-OP Financial Services, which serves many credit unions, said itis not surprised that Visa and MasterCard moved the liability shiftdates for AFDs. “In most parts of the world, EMV took 10-plus yearsto implement,” Michelle Thornton, director, product development forCO-OP, said.

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“Today, less than 40% percent of merchants are EMV-capable andwe understand that AFD presents unique challenges. CO-OP willcontinue monitoring suspicious AFD transaction activity and, as wedo all suspicious card activity, determine what tools andadditional monitoring strategies we can use to minimize and reduceAFD fraud on behalf of our clients.”

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Chole Casber, Product Manager for Des Moines, Iowa-basedpayments processor TMG, which also serves many credit unions,advised, “EMV as a technology standard is in place to provideconsumers with built-in security as they make card-presenttransactions. Pushing the timeline on execution of this standard atthe nation's self-serve gas pumps is concerning, even frustrating,for the credit unions and banks that today carry the fraudliability burden on those transactions.”

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Casber recognized the complexities surrounding the shift formerchants in the fuel dispensing industry. “However, continuing todelay the shift only subverts the intention of the migration. Weexpect it will only amplify the fraud attacks on this particularsegment, leaving financial institutions in an even more difficultplace than they are today.”

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TMG Fraud Prevention Manager Ashley McAlpine noted, “TMG's fraudteam has seen a large increase in fraud originating from automatedfuel dispensers. That's largely because the installation ofskimming devices on these terminals is so easy.”

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McAlpine provided a few reasons why:

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1. Often, the keys used to access the inside of an AFD areuniversal. “Get a hold of one and you have access to literallythousands of units.”

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2. Skimming devices in ATMs have to work off battery power, sothey only last a few hours. “In AFDs, on the other hand, fraudstershook skimming devices directly into the power source of theterminal. Without time restrictions, fraudsters can walk away froman AFD skimming job with a lot more mag-stripe data than they couldget at an ATM.”

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3. Adding to the amount of time these skimmers have to siphondata is the fact gas station employees are not as practiced as ATMservicers on checking for tampering.

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Roy Urrico

Roy W. Urrico specializes in articles about financial technology and services for Credit Union Times, as well as ghostwriting, copywriting, and case studies. Also: writer/editor of a semi-annual newsletter for Association for Financial Technology since 1997 and history projects funded by the U.S Interior Department, National Park Service and Warren County (N.Y.).