By Dee and Emily Karawadra
Impact PaySystem
Fuel retailers share several features that make them attractive targets for today's criminals. In particular, outdoor pay-at-the-pump terminals integrated with automated fuel dispensers (AFDs) are an ideal place for criminals to test the usability of stolen or counterfeit cards without the risk of interacting with store employees.
In addition, because they can resell gasoline with little depreciation in value, criminal rings will often use fraudulent cards to purchase large quantities of gas, which they can sell to willing buyers for cash. Merchants become frustrated when they receive chargebacks for cards that were swiped at the pump.
Certain parameters have been in place for quite a while to help authenticate that each cardholder is actually the one at the pump swiping the card. These include Address Verification Service (AVS) and prompting for a PIN, but ultimately these features can be bypassed, so too often criminals have been able to get away with a tank of gas, and the merchants have been left covering the loss.
The EMV compliance piece, when implemented fully, will aide in combatting counterfeit fraud, but even the added security of EMV won't cover all the fraud these merchants encounter.
The card companies have recognized that gas stations are an easy target for fraudsters. Visa's answer to helping combat fraud at the pump is a service called Visa Transaction Advisor (VTA). This service extends to fuel merchants the power of Visa's global risk intelligence. When VTA is employed, each time a credit card is inserted at the pump, Visa analyzes more than 500 pieces of data about the cardholder's account and global fraud trends. Within milliseconds, the tool determines the risk of the transaction and provides a risk score that helps merchants identify transactions with a higher risk of fraud.
This identification of suspect transactions allows merchants to ask for additional authentication with a simple "See cashier" response before fuel is dispensed at the pump. Most of the time if the transaction is fraudulent, the criminal will drive off and not complete the transaction. This helps stop fraud before criminals even pick up the gas nozzle. The service, which analyzes more than 76 million transactions each month, has been successful among international, national and regional fuel retailers, as well as among smaller local businesses.
How can your fuel merchants participate? Visa has partnered with numerous U.S. acquirers to deliver the service and can also work directly with merchants to implement VTA as part of their fraud management system.
When we set up a pay-at-the-pump fuel merchant, we always request that VTA is set up at the same time. At this moment, our processor has not imposed any extra fees or charges for using this service. And our merchants are seeing results. For example, for one gas station located in a high-crime area we saw over a 40 percent reduction in fraudulent transactions after implementing this service. It is huge a huge benefit to gas stations that are targeted based on their location to have an extra measure of fraud protection before the fuel can be dispensed and the gas station experiences a loss.
With The U.S. migration to EMV chip technology underway for fuel merchants and a date for compliance now set for October 2020, some speculate that the fuel industry will not be ready by the deadline. The card brands recognize that the fuel industry has unique challenges with a complicated infrastructure and specialized technology required for fuel pumps.
In many cases, to become compliant store owners have had to replace their pumps altogether, ripping up concrete and installing new pumps. In addition, there are still issues about developing and providing a sufficient supply of regulatory-compliant EMV hardware and software. Visa is suggesting that merchants utilize VTA and AVS to help combat fraud at the pump in the interim until EMV is fully functional.
Once EMV is fully implemented at AFDs it does not mean that fuel retailers should stop using VTA. The service uses recent fraud trends to help score the risk of transactions, which gives an extra level of protection. This results in less fraud.
Proactively putting merchants on VTA at the time of setup reduces fraud at the pump. Check with your ISO/processor to see how you can enroll your merchants in this program. Also, if you have merchants with a high chargeback rate, a good retention tool is to get them on VTA to help reduce fraud. They will see a significant change quickly while deterring fraudsters from using their pumps as a means to check whether stolen cards are still active.
It is not an overstatement to say this service is truly beneficial. It has been instrumental to many of our merchants and has significantly reduced fraud.
Safari Njema!
For more information on secure payment solutions for today's petroleum market, please see: "2019: A year of opportunity for U.S. petroleum retailers," by Paysafe Group's O.B. Rawls, The Green Sheet, April 22, 2019, issue 19:04:02.
In the article Rawls discussed measures being taken to address the alarming reach of fraud into this market. "The shift to EMV-enabled terminals, the deadline for which is scheduled for October 2020, has been hugely challenging for independent gas stations due to the cost, a dearth of skilled installation technicians and problems integrating with legacy pay-at-pump infrastructure," he wrote. "The latter is especially problematic, since 72 percent of Americans prefer to pay at the pump. Because the challenge is so great, preparations are already underway to meet the deadline.
"Implementation challenges have also meant that skimming – stealing card details via hardware attached to payment terminals – has grown at an alarming rate. The issue is so extensive that last Thanksgiving the U.S. Secret Service launched Operation Deep Impact to tackle credit card skimming devices (following similar smaller initiatives on Memorial Day, Independence Day, and Labor Day)," he wrote. "Before the end of the month over 200 skimming devices had been found and an estimated $6 million of fraud had been prevented."
For additional perspectives, as well as questions and answers about serving petroleum retailers, visit the MLS Forum, via the Forums tab at www.greensheet.com. Search for pay-at-the-pump, petroleum retailers and similar terms. 
Dee Karawadra is president and CEO of Impact PaySystem, and Emily Karawadra is the company's chief financial officer. Since 2001, Impact PaySystem has been a leading provider of payment processing technologies and services to merchants throughout the United States. Through alliances with payments industry leaders such as Chase Paymentech, First Data, Buypass, Sage and more, Impact PaySystem offers tailored solutions to meet the unique needs of each merchant. Dee and Emily will welcome your questions and comments at dee@impactpays.com and emily@impactpays.com, respectively.
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