Ira Wexler/NATSO
In the ‘90s, pay-at-the pump changed the way shoppers paid for fuel. Now new payment technologies such as radio-frequency- identification systems, Google Wallet, and EMV chip debit and credit cards are changing the way consumers pay for goods.
They are also shaping the hardware and software retailers are installing.
“We’re seeing that savvy retailers know their advantage is convenience,” said Mike Finley, head of petroleum and convenience retail product development for software provider Radiant.
The right technology can add to the convenience factor already prevalent at the nation’s truckstops and travel plazas.
RFID Technology
To make things easier for drivers, Love’s Travel Stops and Country Stores plans to install radio-frequency-identification technology (RFID) at all of its locations. RFID relies on a radio signal from a tag attached to the truck or trailer that sends a signal to a sensor located in the fuel island canopy. Once the sensor reads the signal and verifies the information with the carrier, the pump turns on and the driver can fuel the truck. The pump turns off when the truck pulls away.
Jenny Love Meyer, director of communications for Love’s, said RFID creates a competitive advantage for the chain. “We know that the drivers and the fuel managers prefer not to deal with cards. The possibility of eliminating cards is a big convenience for the customers and it reduces the chance for fuel thefts to occur,” Meyer said.
Love’s has announced plans to install technology from QuikQ, Franklin, Tenn., at all of its pumps. The national chain is currently testing RFID at a few locations, but Meyer said there is not a solid timeline for rolling it out.
“We’re making sure that everything works from the time the truck pulls into the bay, the pump is turned on, the billing takes place and the transaction is transmitted to the customer’s home office,” Meyer said. “We’re doing this for our customers and as such we want to make sure it works exactly like we want it to.”
Tom Liutkus, marketing director for TravelCenters of America, told Stop Watch TA is considering RFID and similar technologies from three different sources.
“At this time we are still evaluating options, whether it be one, two, all or none of these,” he said. “We are concerned, of course, about demand for the technology relative to its costs, but we’ve not made any final conclusions at this time, nor have we finished an assessment of reliability and other factors.”
With QuikQ RFID technology, motor carriers don’t have to invest in any hardware — just an RFID chip, a one-time cost ranging from $2 to $5.
Truckstops pay for the equipment. QuikQ has not finalized the cost, but it will probably be under $1,500 a lane. Installing the equipment at the truckstop typically takes about two days at most. The required antennas and readers reside in the fuel canopy. Locations also need to have a server to host the software.
QuikQ is focusing on bringing large carriers onboard with the technology. “We hope as time goes on that the truckstops will take a hard look at approaching customers, particularly the small local businesses they’re already doing business with,” said Ernie Betancourt, president of QuikQ.
The system can use a paper tag stuck to a truck’s windshield or a hard plastic tag that is riveted onto the tractor or trailer. Once the tag arrives on the island, the RFID antenna sees that tag, reports it to the reader and the system starts to process a transaction.
Fleets have shown an interest in increasing security, and this technology will make sure fraud is not occurring at the pump. “When the tag leaves the island, it turns the dispenser off. Carriers absolutely know and are comfortable that it is their truck in the fueling island,” Betancourt said. “The driver’s world will be easier because he won’t have to enter a lot of data.”
Even if a driver isn’t committing fraud, RFID can help carriers maintain more accurate records as mistakes can happen when drivers enter information at the fuel island. The information drivers enter varies, but often includes a driver number, trip number and mileage.
RFID replaces the magnetic strip card reader at the pump, and Fuel Island Manager can process transactions with two payment systems—Comdata or QuikQ’s DF Connect.
Comdata’s transaction fees will remain the same, said Cory Sickles, vice president, product executive for fleets.
“What will lower transaction fees is competition,” Betancourt said, adding that QuikQ DF Connect allows truckstops to have a direct relationship with carriers and manage the billing relationship.
Comdata has made some system changes to incorporate RFID tags onto its system. “We’re going to make this very similar to customer-issued cards,” Sickles said. Comdata will assign an RFID tag number to a unit number, either the tractor or a refrigerated trailer that requires diesel.
Comdata is also making changes at the point of sale so retailers can identify the transaction as an RFID transaction. “When the transaction takes place, there shouldn’t be any change. The pump is still going to turn on just like it normally does. The attendants will probably know it is a cardless transaction, but from their standpoint, it will be just like a card transaction,” Sickles said.
If they’d like, motor carriers can still prompt their drivers for additional information, such as a driver or trip number, Sickles explained.
E-Wallet Applications
The United States is quickly becoming a wireless society, and many retailers are trying to capitalize on the fact that consumers have their handheld devices with them at all times.
Google has launched Google Wallet — an app that allows users to use their phone as their wallet. Retailers install the reader, then users can tap their phone on the reader, which will send payment information. Google Wallet works with Citi MasterCard or the Google Prepaid Card, which users can set up to work with any credit card.
“We aim to eventually support all the payment cards you keep in your leather wallet today. So the only plastic you’ll need is your phone,” Google said on its website.
Google Wallet allows users to pay through their phone, but it also creates a platform for retailers to tie payments in with loyalty points and coupons right on a user’s handheld device. “For this all to take off, the handheld has to be more than a form of payment,” said Paul Cwalina, senior vice president of petroleum and supermarket national accounts for First Data Corp.
When applied correctly, the right technology can lead to improved customer service and, ultimately, loyalty.
“It is hard to ignore that consumers can fall in love with technology that has the right application and the right uses. With that, there are much deeper ways for retailers to engage with customers,” said George Zirkle, vice president of partner development, advanced solutions and innovation for First Data. “For the retailer, it provides them a channel to do much better targeted marketing and provide therightoffertotherightconsumer.”
Those interviewed told Stop Watch they expect retailers to embrace mobile payment technologies inside the store first before moving them out to the fuel islands.
Kevin DeVinney, marketing director of Fleet Systems for Gilbarco Veeder Root, said, “From a cost perspective, I’m not going to lose as much if I choose wrong on the inside,” noting that there are often just a few registers inside a store versus the number of pumps on the fuel island. “If the masses come, then I can invest in things outside.”
What’s more, adopting mobile payment technology is not as complex from the point-of-sale standpoint at many retailers as it is at fuel islands, Cwalina said. He also expects retailers to begin tying loyalty, couponing and mobile payments together inside their locations, then move it out to their pumps. “In a few years out those that aren’t doing this at the dispenser will be at a disadvantage,” he said.
The Right App
The move to mobile payment technologies may be one of the most significant changes for fuel retailers since pay-at-the-pump took over as the norm. Finley said pay-at-the-pump benefited retailers from a labor perspective and created convenience for their customers, but the retailers saw a decrease in the number of people who go inside the store.
Now apps for smartphones aim to bring the store to the consumer while he or she is pumping fuel. Radiant offers Convenience Plus, a smartphone app that allows customers to first scan a code on the pump, then browse and buy things — grab-and-go food items, 12-packs of soda or bags of ice, for example — that will be tacked onto their final fuel tab. After pumping fuel, they can pick up the items they already bought.
“It is about consolidating fuel and multiple purchases into a single transaction,” Finley said.
Radiant is piloting the project at a retail chain in the Midwest. Finley said it can work with any point-of-sale system or retailers can avoid interchange fees by integrating it to work with a pre-paid application that is ideal for proven, loyal customers.
“We can build into a customer’s profile if you want to bill a fleet account or an ACH account,” Finley said.
For customers who want to pay with a bankcard, Finley suggests they swipe it at the pump versus entering it into their phone. He explained that interchange fees are typically higher when a card number is entered into a phone versus when the card is swiped.
“In our industry, we can’t accept this idea that I’m going to pay a high transaction fee,” Finley said.
Software provider Retalix offers Mobile Shopper as part of the Retalix 10 Store Suite, a new software platform for retailers that merges store data and business processes into a single engine. “It enables a seamless, consistent customer experience across all touch points — including mobile apps, the point-of-sale, fuel pumps, etc.,” said Oren Betzaleli, executive vice president and head of products and marketing at Retalix.
Betzaleli said he believes that near-field communication (NFC) that allows users to just swipe a phone or credit card will eventually be widely used, but added, “We also believe that providing retailers with a simplified migration path to mobile payments today is of great importance since it allows them to provide enhanced convenience to store patrons.”
“Retalix Mobile Shopper provides several non-NFC dependent ways to connect the consumer’s smartphone with the store, POS and fuel pump. Thus, it enables implementing mobile payments before NFC becomes widely used, and without the retailer having to invest in replacing all the pin-pads to NFC-enabled devices.”
Betzaleli said Mobile Shopper can be used with any hardware. “Likewise, the mobile app can adapt to iOS and Android devices,” he said.
Because Mobile Shopper is new, Retalix is still defining its cost structure.
To turn a pump “on” with Mobile Shopper, the customers identify the pumps they want to use and the desired payment method using the app. This information is communicated to the Retalix Shopper’s Gateway — a component of the Retalix Mobile Shopper — that obtains approval for the payment method and sends a request to the gas station or travel plaza to open the pump.
The Mobile Shopper also has a self-scanner module, which allows customers to have a direct connection with the server that serves their local store. That allows the app to provide the customer with accurate and up-to-date information regarding the price of each item, including last-minute promotions and markdowns. Shoppers can use their smartphone’s camera to scan a displayed code as they enter the store.
“The shopper can then scan items via the app as they browse the store. Since the app is also tied to the customer’s loyalty account, they can receive personalized, relevant promotions throughout their visit. Once they gather all of their desired items, the customer can either use their phone to pay or proceed to the POS,” Betzaleli said.
Whether retailers use an existing app or create one of their own, they should plan to serve users of both the iPhone and Android. “As a retailer, if you’ve decided to enter the mobile space, you can’t ignore having an app for at least those two platforms,” Zirkle said.
Chip-and-Pin Cards
While some technology upgrades at retailers will be based solely on customer preference or convenience, others will be required by the nation’s largest credit card companies.
In August, Visa announced its plans to essentially require chip- and-pin cards, called EMV, by October 2015. With EMV, a chip replaces the magnetic strip on the card.
Because fuel pumps are more complex, Finley told Stop Watch, Visa will give retailers until 2017 to have EMV-compliant gas pumps. Retailers that don’t make the upgrade will be responsible for fraud. In a written release Visa said, “The policy assigns liability for counterfeit fraud to the party that has not made the investment in EMV chip cards (issuers) or terminals (merchants’ acquirers). The policy encourages wider deployment of EMV cards and terminals.” On its website Visa said it will waive Payment Card Industry Data Security Standard compliance validation requirements for merchants that invest in contact and contactless chip payment terminals.
EMV cards are already used worldwide. Visa said that today, excluding the U.S., 44 percent of all cards are EMV chip cards and 74 percent of all terminals are EMV-chip capable.
Changes in the Pump
Retailers may be left wondering what the latest technology means for the pump.
Gilbarco’s DeVinney said, “The pump is a peripheral device to the point of sale. The thing you see at the island is the dispenser and it really is driven by your POS or back-office system.”
That being said, Gilbarco is working to “future proof” its pumps as much as possible so retailers can add technology to them as it comes on. “With technology it is so difficult to anticipate the next thing coming,” DeVinney said. “We’re continuing to make sure our dispensers in the near term — three to five years out — have the ability to have things added at a later point.”
Currently, retailers can add hardware to dispensers that are five years old or less. “If I want to read barcodes, I would put a barcode reader in the pump,” DeVinney said. “For pumps that are five to seven years old, you probably have to replace the pump.”
The Ultimate Decision
For retailers, the biggest challenge is that no one knows which platform will take off. “That is one of the biggest items that retailers are thinking through long and hard at this point,” Zirkle said. “What decision do they make and when do they make it?”
{Editor's Note} Do you want to learn more about the latest payment technologies? Don’t miss Tomorrow’s Technology: Keynote Speaker and Breakfast on the Show Floor at The NATSO Show on Tuesday, Feb. 21, at 8:00 a.m.
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