Debranding Gas Stations: What Comes Next?

Gas stations that are not EMV-compliant face the possibility of losing their contract with a petroleum brand or having to pay steep fines. For owners that de-brand, there are options.

The implementation of new rules shifting the liability for non-EMV-enabled card payments to gas stations is already having a significant impact on the industry.

It has only been a few months since petroleum merchants began taking financial responsibility for fraud that occurs at pumps that don’t require chip-and-pin EMV verification. Yet, many of the long-term consequences—particularly for those that are yet to install new payment terminals—are becoming clear.

One of these consequences is that the rate of gas stations de-branding is increasing.

This can be a confusing, and often worrying, time for gas-station owners. After all, no longer being associated with a major brand can have serious financial implications. But it can also mean thinking through the many aspects of running a gas station operation, perhaps for the first time.

When operating under a partnership with a brand, much of the nuts-and-bolts detail of running a business is overseen by the brand, so it is understandable that newly independent gas stations have a lot of questions and are looking for answers. The good news is that gas stations that find themselves in this situation have options, and there are specialists in the petroleum industry that they can turn to.

The Only Choice

But first, let’s look at why gas stations de-branding. Typically, gas stations have long-term contracts with major petroleum brands. There are good reasons for this. These include increased consumer recognition and trust, and sometimes more economical access to fuel.

However, the introduction of the EMV liability shift left both parties considering their options when the gas station has yet to convert its at-pump payments authorization to chip-and-PIN. Many brands simply do not want to be liable for at-pump fraud, and this discomfort is only going to grow worse with fraudsters increasingly targeting these vendors.

The result is that many brands are strongly considering terminating the contracts they have with gas-station owners that haven’t installed chip-and-PIN terminals. The grounds for this action are that the owners are in breach of the contracts’ terms and conditions.

Even where they haven’t ended their relationships altogether with gas stations that are yet to implement EMV-enabled at-pump payments, it is becoming increasingly common for brands to charge a monthly non-compliance fee. In many cases, this fee is increasing every month.

With the cost of non-compliance escalating—but the industry remaining backlogged by a lack of technicians and months of hardware orders that haven’t been fulfilled—gas stations’ only choice is to pay the fees or consider an alternative future separate from the brand.

Gas stations that are de-branding may be thinking for the first time about how they accept payments, as brands often manage the partnerships with payments providers directly. This, coupled with the ongoing headache of navigating the at-pump EMV requirements, means partnering with a payments provider. Increasingly, this is going to be key to running a successful business once the de-branding has been completed.

Payments companies that specialize in the petroleum industry can provide support and advice to gas-station owners to navigate through a complex landscape. And there are other questions gas stations will need to answer once they have de-branded. Most notably, this includes where they will now buy their gas. But again, payments providers with deep experience in the sector can also offer support through their extensive partnerships throughout the industry.

There are payments companies that are experts in merchant services for gas stations that can take a significant amount of stress from the shoulders of owners. These owners should look especially for companies that have ongoing partnerships with other services, such as technicians that can reduce much of the worry surrounding de-branding.

The Inevitable Fraud

But it’s a mistake to think de-branding means owners don’t have to become EMV-compliant. Although the reason gas stations may be considering de-branding is to avoid the heavy fees brands are charging for not being compliant, this shouldn’t be viewed as an alternative solution to the issue of at-pump fraud liability.

As we have already noted, fraudsters are increasingly targeting gas stations that don’t have EMV-enabled payment terminals at their pumps. So even where gas stations haven’t so far seen a spike in fraud costs post the liability shift, it is inevitable that this will happen.

And while it is true that there remain delays in the supply chain for gas stations that are trying to replace their existing terminals to become compliant, that isn’t a reason not to take immediate action. Payments specialists within the petroleum industry can provide options to gas stations that are looking for temporary solutions or ones that are less costly than full replacement of all at-pump payment terminals.

While de-branding is sure to be a stressful time for some gas stations, it is important to know that there are experts to help navigate through these uncharted waters. But it’s critical to engage with the right payments partner.

For gas stations that are in the process of de-branding— or are strongly considering de-branding in the near future—there are plenty of options for how to move forward and success stories to emulate. Reaching out to a payments industry leader in the sector is the start of that journey.

—Lori Griboski is vice president of sales at Petroleum Card Services, Paysafe.