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.