Managing the Retail Petroleum Migration to EMV

THE US RETAIL PETROLEUM INDUSTRY

Industry Statistics (1)

•  150,000 retail fueling sites

o 125,000 convenience stores

o 50% branded with a major oil; 50% unbranded fuel; unbranded growing

o Many large C-store chains are multibranded

o 60% single store operations

o 99.5% independently owned and/or operated

•  75% of fuel sales on payment cards

•  12% of US card transaction sales

(1) 2016 NACS Retail Fuels Report, March 2016

US RETAIL PETROLEUM LANDSCAPE

Dispenser Interface

THE US RETAIL PETROLEUM INDUSTRY EMV Challenges for the Retail Petroleum Industry

•  Retail Petroleum sites need: o  Special purpose POS that can manage fuel, C-store, and site specific offers

o  Connection to an acquirer that can handle fleet cards and petro private label

•  Petro acquirer and POS vendor readiness

•  ~ 1MM outside dispenser card readers o  $15-$25K per site for outdoor terminal EMV upgrades

o  $80K per site for EMV dispenser replacement

•  Site Operators select outdoor terminals o  Large number of combinations (Terminal – POS – Acquirers) need to be Tested

and Certified

o  Sites need to fund these upgrades from thin margins

W. CAPRA 4Q2015 EMV SURVEY

When will 50% of your C-Store locations be able to take EMV cards?

Inside At the Pump

9%

27%

27%

9%

27%

0% 20% 40% 60% 80% 100%

2017 or Later

Dec-16

Jun-16

Dec-15

Already > 50%

36%

27%

23%

14%

0% 20% 40% 60% 80% 100%

2019 or Later

Dec-18

Oct-17

Dec-16

THE WAY FORWARD

•  Major Oil Brands have active projects:

o  POS/Payment App, pinpad, and acquirer interfaces have to change

o  Funding of hardware upgrades uncertain

•  Unbranded sites dependent on their Acquirers and POS vendors

•  Testing and Certification of the many combinations still a concern, but some progress has been made at the EMV Migration Forum on clarifying Testing and Certification processes

•  Worldwide collapse of oil prices increases funding uncertainty

W. Capra Services Security

Follow up questions? Feel free to reach out:

Terry Mahoney W. Capra Consulting Group tmahoney@wcapra.com 312-873-3302