Talking With: Gemalto's Jack Jania about EMV at the fuel pump
The card networks decided late last year to show some mercy on fuel operators and pushed back their EMV deadline to Oct. 1, 2020.
One of the primary reasons for the extension is simple: The fuel ecosystem is complicated.
It's a sector that Gemalto is monitoring closely, considering its position in the cards and payments industry. We spoke with Jack Jania, Gemalto senior vice president of strategic alliances, about the delay, emerging fuel pump technologies and mobile payments.
MPT: Which factors do you think the card networks considered when pushing back the EMV deadline for fuel operators?
JJ: It's an attempt to be sensitive to the different players in the industry and the complexities involved. And to be honest, the complexities of upgrading an automated fuel dispenser and integrating that with a loyalty system and also tying that into the cash register inside the convenience store is a more complex enterprise than standalone POS upgrades to smaller merchants.
I don't want to minimize the amount of work it takes for a fully integrated merchant like Best Buy, Target or Wal-Mart to upgrade their infrastructure because their systems are much more complex in the backend. But when you look at the small and medium-size merchants, they aren't running custom kernels on their POS terminals. They are probably using [independent sales organizations] to be serviced. A one-size-fits-all, out-of-the-box solution that they use is much easier to upgrade.
That being said, when you look at all the gasoline merchants, especially the big corporate merchants, they are all tied into loyalty and fleet programs. It's a lot more work. In my opinion, I think [the card networks] are trying to be flexible in listening to the realities and complexities of that particular merchant category.
[The delay] is also a positive thing because it will give the fuel dispensers more time to upgrade to EMV contactless to take advantage of NFC payments. I look at this as an opportunity for fuel merchants to future-proof their systems.
MPT: With this extra time, there should be no excuse for the larger fuel merchants not to add contactless acceptance. Is that fair to say?
JJ: The way I would characterize it is that it makes integrating the support for all payment form factors a much more viable proposition from a timing perspective. Now, they have an extra three years to do it right as opposed to rushing it.
When you look at the cost of a POS terminal at a standard merchant and all of the terminals that have been delivered into the marketplace, [Ingenico and Verifone] have delivered POS terminals that have the hardware to support contactless payments. That hardware being available, prevalent and shipping is now another reason it makes sense to put all the hardware into your automated fuel dispenser.
MPT: Probably the better question to ask is whether fuel operators will turn on the contactless capability. We've seen merchants that have decided not to accept contactless and mobile payments at their enabled terminals.
JJ: We're starting to see more reports of merchants turning on contactless. In reality, when you look at contactless, it is the easiest payment form factor for low-value transactions.
If you're doing a transaction that's $100 or less, I think the market will eventually go to those transactions being contactless without a signature, or without PIN. When you start getting into higher-ticket transactions, those things usually take more time anyway.
MPT: How do you view concepts such as in-car payments at the fuel pump?
JJ: These concepts will come, and not only for fuel dispensers. There will be cool concepts for the drive-thru. Cars have much more data available than a credit card or a dual-interface credit card or a mobile device. The car can report ... when you're ordering a hamburger and you're 15 minutes away from your local McDonald's and place the order ahead of time. Drive-thru lanes may cease to exist. You may pull up to the curb and have someone deliver the food to your car.
So, those are the kinds of things you're seeing, but that's three to five years out. We'll see pilots and we'll see some cool stuff, but the commercialization will take a while.
MPT:What's Gemalto's role when it comes to such concepts?
JJ: We have all of the over-the-air platforms to do this on mobile devices and automobiles. We already have automobile key solutions up and running in two European manufacturers.
This is based on our over-the-air technology that we've used in mobile devices for the past 20 years. We've also done all personalization of contactless chip credit cards in systems, and what we've done is integrated those two platforms — one that securely manages all the payment data and one that manages all of your mobile subscription data — and we've merged the functionality of those and that's how we can provision not only mobile accounts into cell phone or car, but your payment credentials as well.
MPT: As more fuel operators come online with upgraded terminals adding more contactless acceptance points, does that help mobile payments in general?
JJ:The whole mobile experience is suffering from lack of acceptance and a lot of the contactless acceptance that's out in the field is the old mag stripe terminals without EMV.
That being said, there is positive activity going on. In order to reinforce the mobile phone and contactless user experience, you need places to use it and you need to use it frequently. You're starting to see movement in mass transit in the U.S. with open loop contactless acceptance, which will be one of those use cases that will really help support contactless payments.
Will Hernandez Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.