To win and keep business, fuel retailers are pumping up the customer experience. Some are offering real food - such as a take-out lunch or an apple - from the adjacent convenience or grocery store. Some are enabling drivers to order a soda from their car or pay with a mobile app.

A new era of remote work and the slow return of office commuter trips has reshaped consumer behavior. Home-office workers tend to plan their trips and are less likely to stop in for a gallon of milk on the way home. Meanwhile, commercial fuel sales will likely continue to grow as consumer spending continues and the trucking industry helps retailers restock depleted inventory.1

With slim margins at the pump and softer consumer demand, many businesses are rethinking customer experiences both in-store and at the pump to drive revenue.

This means:

Payments help retailers keep the lights on, but payments are often more complex for fuel providers than other retailers. If you sell fuel, you likely manage multiple terminals, pump configurations and POS systems that have to work together . If you offer both consumer and commercial fuel, the different fuel dispensers may require different payment systems altogether. Convenience stores may include even more systems. For example, a retailer may have one system for the cash wrap, another for the deli counter, yet another for self-checkout, and even one for drive-through purchases. Managing multiple payments systems in the store and at the pump is common practice given the various lines of business a fuel retailer may operate and requires retailers to manage additional complexity.

Restructuring your payments systems and flows to better work with your business model can help increase revenue, while minimizing fraud and costs. Payments fees are often the second largest operational expense for fuel retailers and convenience stores, after the cost of labor. In 2019, the industry’s pretax profit was $11.9 billion while card fees paid by the industry were $11.8 billion.2

If payment fees are expensive, fraud can be draining. Credit card fraud and theft have plagued the fuel retailing industry. Retailers must contend with charlatans using counterfeit and stolen accounts at their pumps and stores. Bad actors also have attached skimming devices to payment terminals to steal credit card data.

Despite hefty challenges with technology, hardware availability, costs and resource bandwidth, many fuel retailers have converted to chip-enabled EMV® (Europay, Mastercard and Visa) acceptance. Upgrading to EMV® readers helps meet card brand compliance requirements, improve security and reduce fraud. Introduced in the US in 2015, EMV® cards led to a 76 percent reduction in counterfeit fraud dollars in their first three years of use.3 The number of EMV®-compliant merchants grew from 392,000 to over 3.5 million. By March 2019, 99 percent of U.S. payment volume was through chip-enabled credit and debit cards.

For the fuel retailing industry, EMV® compliance came at a high cost. Many fuel retailers opened wallets and temporarily turned away business to comply with the expensive, time-consuming upgrade required. Some retailers were understandably reluctant to bring in specialized technicians to retrofit gas station payment terminals, replacing both hardware and older wiring at a cost of $6,000 to $10,000 per pump, according to widely reported industry estimates.4 Based on the size of an average gas station, this translated into about $50,000 hard costs per location, before accounting for the loss of business during the upgrades.

As fuel retailers continue to migrate to mobile, e-commerce and other card-not-present form factors, fraud may become an even bigger threat.

Retailers are differentiating with new offerings and payment methods that drive convenience and attract loyalty.

  • Some fuel retailers are adding electric vehicle (EV) chargers, alternative fuel and diesel to their line-up to accommodate more types of vehicles and attract new business.
  • Others are experimenting with quick-service restaurant and other in-store offerings. Thriving amid low fuel demand when so many people work at home requires a strong in-store offer that gets them out of their car and into the store.
  • Alternatively, some retailers are enabling customers to order from their car. Out-of-store communications at the pump - or to loyalty shoppers through digital channel - can help drive in-store visits and purchases.5
  • Retailers are also appealing to new shopping behaviors centered around mobile phone post-pandemic: McKinsey consumer research reports 75 percent of US consumers surveyed are “trying a new shopping behavior in response to economic pressures, store closings, and changing priorities.”6 These new shopping behaviors include curbside pickup, online order delivery, purchasing from different brands, and using new digital shopping channels, including social media.
  • Fuel retailers have had some success with mobile and loyalty apps, which enable consumers to use location services to pay without swiping a card and earn rewards over time.7

Building customer connection and purchase loyalty is key. Certainly, a top priority for convenience-store operators is customer retention: Convenience retailers in the U.S. placed customer retention at the top of their list of goals (16 percent), even ahead of new customer acquisition (14 percent) and existing customer insights (9 percent).8

In the digital era, business requires flexibility. Some retailers may find it challenging to keep up with new technology, new offerings and new payments models.

  • Fuel retailers with EV chargers will need to keep up with evolving charging technology as well as new payment systems.
  • Consumers will likely continue to shift toward tap-and-go retail transactions. Expect a continued move to mobile apps, including the ability to pay at the pump and order ahead. Adoption may be low today but the channel and capabilities are growing. Apps, as mentioned above, can help drive customer connection and loyalty and allow the retailer to gain insight into shopping behavior.
  • And sooner than you might think, retailers may need to adapt to connected cars, which will include built-in wallets that enable drivers to pay for tolls, fuel and fast food.

How to Navigate Disruptions in Fueling

Whether your operation relies on sophisticated data scientists or a spreadsheet, J.P. Morgan can help you focus your time and effort to modernize. Adopting new payment models can help your business demystify swipe fees, find the right mix of products offerings, and put you back in control of payment transaction costs can help you demystify swipe fees, find the right mix of product offerings and put you back in control of payment transaction costs.

Whether you rely on sophisticated data scientists or a spreadsheet, your organization can modernize its payments strategy. This includes demystifying and optimizing swipe fees and finding the right mix of product offerings. Dedicating time and effort to these projects can help your organization better control its payments and transaction costs.

Further, it’s valuable if your partner can consult and advocate across the entire payments ecosystem. Acquiring banks, payments, processors, and card issuers are needed and can support the following solutions below:

  • true

    Optimize swipe fees

  • true

    Connect with customers to understand how to enhance their experience

  • true

    Develop custom payment solutions that streamline these processes

  • true

    Build omni-channel platforms to manage customer transactions across fuel, food, self-service, and self-checkout

  • true

    Identify the right pre-certified solutions such as POS equipment, service providers, and mobile app vendors

It can be particularly helpful if you work with a partner that can provide a comprehensive set of solutions. Most providers only offer some of the above solutions, but some partners can offer all of these solutions, which also ensures that each is properly integrated to maximize the benefits for your organization.

Connect with your local J.P. Morgan representative to learn more about our comprehensive set of solutions

This material was prepared exclusively for the benefit and internal use of the JPMorgan client to whom it is directly addressed (including such client’s subsidiaries, the “Company”) in order to assist the Company in evaluating a possible transaction(s) and does not carry any right of disclosure to any other party. In preparing this material, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Company or which was otherwise reviewed by us. This material is for discussion purposes only and is incomplete without reference to the other briefings provided by JPMorgan. Neither this material nor any of its contents may be disclosed or used for any other purpose without the prior written consent of JPMorgan.

J.P. Morgan, JPMorgan, JPMorgan Chase and Chase are marketing names for certain businesses of JPMorgan Chase & Co. and its subsidiaries worldwide (collectively, “JPMC”). Products or services may be marketed and/or provided by commercial banks such as JPMorgan Chase Bank, N.A., securities or other non-banking affiliates or other JPMC entities and such affiliate or entity may or may not be the JPMC entity operating and regulated in your jurisdiction locally. JPMC contact persons may be employees or officers of any of the foregoing entities and the terms “J.P. Morgan”, “JPMorgan”, “JPMorgan Chase” and “Chase” if and as used herein include as applicable all such employees or officers and/or entities irrespective of marketing name(s) used. Nothing in this material is a solicitation by JPMC of any product or service which would be unlawful under applicable laws or regulations.

Investments or strategies discussed herein may not be suitable for all investors. Neither JPMorgan nor any of its directors, officers, employees or agents shall incur in any responsibility or liability whatsoever to the Company or any other party with respect to the contents of any matters referred herein, or discussed as a result of, this material. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice or investment recommendations. Please consult your own tax, legal, accounting or investment advisor concerning such matters.

Not all products and services are available in all geographic areas. Eligibility for particular products and services is subject to final determination by JPMC and or its affiliates/subsidiaries. This material does not constitute a commitment by any JPMC entity to extend or arrange credit or to provide any other products or services and JPMorgan reserves the right to withdraw at any time. All services are subject to applicable laws, regulations, and applicable approvals and notifications. The Company should examine the specific restrictions and limitations under the laws of its own jurisdiction that may be applicable to the Company due to its nature or to the products and services referred herein. Notwithstanding anything to the contrary, the statements in this material are not intended to be legally binding. Any products, services, terms or other matters described herein (other than in respect of confidentiality) are subject to the terms of separate legally binding documentation and/or are subject to change without notice.

Changes to Interbank Offered Rates (IBORs) and other benchmark rates: Certain interest rate benchmarks are, or may in the future become, subject to ongoing international, national and other regulatory guidance, reform and proposals for reform. For more information, please consult: .

JPMorgan Chase Bank, N.A. Member FDIC.

JPMorgan Chase Bank, N.A., organized under the laws of U.S.A. with limited liability.