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Dear PEI Member: Last month, congressional leaders in Washington
continued to focus on the safety of the U.S. payments system in the
aftermath of the massive retailer breaches at Target, Neiman Marcus and
others. The House Committee on Financial Services held its session March 5,
while the House Committee on Science, Space and Technology hearing was March
6. The message coming out of those hearings was that the adoption of EMV
cards (Europay, MasterCard and Visa) is one of many steps that need to be
taken to secure the U.S. payments system.
The EMV system, which uses smart chip technology,
features payment instruments (cards, mobile phones, etc.) with embedded
microprocessor chips that store and protect cardholder data. Under the EMV
standard, a cardholder’s confidential data is more secure than on the
current magnetic stripe card because EMV supports dynamic authentication
that is verified at the point of sale (POS) terminal.
The EMV system has been long in coming to the United
States. For our industry, the timetable for shifting of liability has not
changed for several years:
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Merchants that decline to use EMV-compatible POS technology
for in-store transactions by October 1, 2015, will be liable for any
in-store fraudulent transactions.
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Fuel marketers that are not using EMV-ready equipment at their
dispensers by October 1, 2017, will assume liability for fraudulent
transactions on the fuel island.
Probably the biggest issue for implementing EMV in the
United States is the time and cost that would be required for full
implementation. How much time would it take to replace 15 million POS
devices (more than 1 million in our industry), 360,000 automated teller
machines, and over 1 billion credit and debit cards? Gray Taylor, executive
director for the Petroleum Convenience Alliance for Technology Standards (PCATS),
believes the petroleum marketing industry “would be on the hook for around
$4 billion to upgrade pump terminals and POS,” according to the February 19
issue of Oil Express.
We don’t claim to have a crystal ball to know when all
of this will come together in the United States, but we feel confident in
saying that as a result of the high profile and the size of the most recent
breaches, the adoption of EMV has gained momentum. Here are some other
conclusions we have reached after talking to petroleum marketers and PEI
members over the last 30 days.
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EMV Gains Momentum
Debit Card Swipe Fees
RP700 to be
Revised
2014 PEI Directory
PEI and Industry News »
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The urgency for EMV is not just about liability deadlines but
also about potential fraud. Since Europe and Canada have moved to EMV,
criminals will be attracted to move to the weakest link in the
industrialized world, which is the United States.
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In the past, the payment networks have either extended or
completely abandoned their own timelines. That likely will not be the case
this time around. As recently as January 8, MasterCard reiterated its
resolve to “keep our 2015 liability shift dates.” Congressional attention to
the retailer breaches and the impending liability shift has become a
catalyst for EMV adoption. It is likely that EMV implementation in the
United States will now be on the fast track.
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EMV will be helpful but it is not the silver bullet. Experts
agree that EMV would not have prevented the Target breach because the
malware that attacked Target was looking for account information inside POS
devices’ memories, where data is unencrypted. This information would have
been compromised regardless of whether or not it came from EMV cards because
it was not taken directly from the cards themselves.
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The unresolved questions springing from litigation surrounding
the Durbin amendment to the Dodd-Frank Act, which capped debit card
interchange rates and mandated debit routing options, may begin to disappear
as the result of a March 21 appeals court decision (see next article).
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It is clear now that information is an extremely valuable
commercial asset. As such, ensuring its security merits significant
investment and planning. Information security
breaches are now seemingly common business risks.
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The petroleum marketing industry is not being forced to accept
EMV. Over the next three years, petroleum marketers need to decide whether
to process cards using EMV technology or to accept financial liability for
fraud losses. The question seems to boil down to this: Is the money and time
it takes to shift to EMV worth the company’s financial security and
commercial reputation in this highly competitive marketplace? We think most
will conclude that it is.
APPEALS COURT UPHOLDS FED’S DEBIT CARD SWIPE FEE
LIMIT
A three-member panel of the U.S. Court of Appeals for the District of
Columbia Circuit upheld the Federal Reserve’s (Fed) controversial rules for
debit card “swipe fees” on March 21, disappointing the petroleum marketing
industry and other retail merchants that accept debit cards.
Swipe fees, also known as interchange fees, are set by
Visa, MasterCard and other bank networks. Before Congress intervened in
2010, the fees paid by retailers were about 44 cents per transaction. Hoping
that lower fees would result in lower prices for consumers, lawmakers called
for a cap in passing the 2010 Dodd-Frank law. They directed the Fed to set a
limit that would cover the costs to banks to provide the cards, ignoring any
expenses that were not tied to specific debit transactions. The Fed decided
network processing fees, costs to monitor transactions for fraud and other
expenses were relevant, even though they were not specifically mentioned in
the law, and incorporated them into a 21 cents per transaction cap in 2011.
A U.S. district court in July 2013 agreed with a group
of retailers (NACS v. Board of Governors of the Federal Reserve System) that
the costs went beyond what was allowed under the law and overturned the
Fed’s rule. The three-member panel of the U.S. Appeals Court sided with the
Fed March 21, saying the law’s “ambiguity” gave regulators leeway to set a
higher cap fee. The appeals panel did direct the Fed to better explain the
way it treated banks’ costs for monitoring transactions for potential
fraud.
The panel also sided with the Fed on a rule related to
networks that process debit transactions. The Fed proposed to require
activation of two unaffiliated networks on each debit card regardless of
method of authentication. Retailers argued the Fed did not do enough to
promote competition among those networks, as Dodd-Frank required. The panel
did not agree with the retailers, opining that the “Board’s rule seems to
comply perfectly with Congress’s command.”
The retailers could appeal to the full appellate court
or directly to the U.S. Supreme Court.
PEI’S LUBE EQUIPMENT DESIGN, INSTALLATION AND
MAINTENANCE DOCUMENT TO BE REVISED
The PEI Vehicle-Maintenance Fluids Equipment Committee is soliciting
comments to revise PEI’s Recommended Practices for the Design and
Maintenance of Fluid-Distribution Systems at Vehicle Maintenance Facilities
(PEI/RP700-09).
The recommended practices apply to stationary,
centralized fluid-distribution systems for vehicle-related new and used
fluids such as motor oil, gear oil, transmission fluid, hydraulic fluid,
grease, antifreeze and windshield washer fluid. The equipment covered
includes supply containers (e.g., tanks, totes, drums, kegs, pails), piping
and tubing, pumps, compressors, hose, reels, control handles and other
equipment typically used to construct the systems.
If you have suggestions or recommendations for
improving PEI/RP700-09, submit them online at
www.pei.org/rp700. Instructions for completing the form are provided on
the website.
Those interested in lube systems are encouraged to
submit comments. All comments must be received at PEI by Friday, May 16,
2014, to be considered. If you have questions or need further information,
contact Bob Young at
byoung@pei.org or 918-236-3966.
2014 PEI DIRECTORY AVAILABLE
The 2014 PEI Directory is out the door. Member companies receive
one print copy of the PEI Directory as part of their membership.
Additional print copies can be purchased by PEI members for $40 each ($120
for nonmembers). Click
here to order online or contact Teresa Jonkman at
tjonkman@pei.org or 918-236-3969.
The PEI Directory contains a roster of all
members, lines carried, products manufactured and a description of their
operations. Also included are important details about PEI committees and
member services. The Directory is also available online. Members and
their customers can access, search and download the Directory on
their computer, smartphone or tablet 24/7/365. Click
here to view the
digital edition.
APPOINTMENTS AND PROMOTIONS
Guardian Fueling Technologies, Jacksonville, Florida, has promoted David
McMichael to corporate director of services. McMichael will oversee the
day-to-day service operation of the company. Roger Henson, formerly of
Thornton’s Inc., was named branch manager of Guardian’s Orlando office.
Steve Przesmitzki has left the U.S. Department of Energy (DOE) for a
position with Aramco Services, Novi, Michigan. He will work in a new
Research and Development Center dedicated to transportation fuels research.
Formerly with the National Renewable Energy Lab and most recently in the DOE
Vehicle Technologies Office, Steve represented DOE well at PEI events and
was always available to answer our questions. Kevin Stork has taken over
Steve’s responsibilities in DOE’s Fuel and Lubricants Program. Kevin has a
long history in the program as the team lead.
DEATHS
James Lynn Weir, Blue Ridge, Georgia, died December 8, 2013, due to
complications of lung cancer. He was 76. He began his career in 1960 as a
construction engineer for Exxon. He joined Lucas Ford Associates in 1970 and
served as a manufacturer’s representative with the firm until his retirement
in 1997. He is survived by his daughter, Lisa, and his brother, Paul.
MEMBERSHIP APPLICATIONS
New Jersey CNG consulting firm. Corban Energy Group, 418 Falmouth
Avenue, Elmwood Park, New Jersey 07407, has applied for affiliate division
membership. Daniel Chung is president of the firm, which was established in
2012. Corban Energy Group creates and develops customized CNG solutions for
individual fleet operations. Sponsored for PEI membership by Keith
Griesinger, FuelForce, Princeton, NJ.
www.corbanenergygroup.com
Arizona construction contractor. KEAR Civil Corporation, 22041 North
23rd Avenue, Phoenix, Arizona 85027, has applied for service and
construction division membership. Mike Fossett is president of the firm,
which was established in 2001. The company specializes in aviation fueling
and general petroleum construction and maintenance contracts. Sponsored for
PEI membership by Gregg Miller, NWPump, Portland, OR. www.kearcorp.com
Australia service and construction firm. G-Tech Holdings Pty. Ltd., P.
O. Box 1101, Hamilton, Queensland, Australia 4007, has applied for service
and construction division membership. Grant McPherson is managing director
for the firm, which was established in 1998. The company is a service and
construction contractor. Sponsored for PEI membership by Russell Dupuy,
EnvironMon, Carrum Downs, Victoria, Australia.
www.g-tech.net.au
Illinois island and coating company. Rugid Guard, LLC, 287 Southwoods
Center, Columbia, Illinois 62236, has applied for service and construction
division membership. Kevin Kammermayer is owner of the company, which was
established in 2010. The company provides an alternative to island and
curbing replacement with a high tear strength industrial coating. Sponsored
for PEI membership by Chris Piatchek, PiSquare, St. Louis, MO.
www.rugidguardusa.com
Indiana petroleum service contractor. Tri-State Service & Maintenance
Inc., P. O. Box 281, Cannelton, Indiana 47520, has applied for service and
construction division membership. Jeremie H. Joyal is vice president of the
firm, which was established in 2001. The company provides petroleum service
to customers in southern Indiana, central Kentucky and parts of Tennessee.
Sponsored for PEI membership by Joey D. Batchelor, GuardTech, Jacksonville,
FL.
Massachusetts contractor. Dixon, Inc., 361 West Main Street,
Northborough, Massachusetts 01532, has applied for service and construction
division membership. Philip Dixon is project manager for the firm, which was
established in 2002. The company installs tank, lines, dispensers and
related equipment. Sponsored for PEI membership by John Nolan, JWKennedy,
East Providence, RI.
www.dixon-inc.com
Missouri fuel and tank cleaning company. reNUEL Fuel, LLC, 2711
Warwick Trafficway A, Kansas City, Missouri 64108, has applied for service
and construction division membership. Bryce Wittenborn is CEO of the firm,
which was established in 2010. reNUEL Fuel is a complete fuel quality
management company that specializes in fuel and tank cleaning, lab analysis
and compliance regulation. Sponsored for PEI membership by David Engelken,
TankMgmt, Topeka, KS.
www.renuelfuel.com
New York equipment installation firm. Bolla Pump & Tank, 809 Stewart
Avenue, Garden City, New York 11530, has applied for service and
construction division membership. Christopher Honor is president of the
company which was founded in 2012. The company specializes in the
installation of underground storage tanks, dispensers and associated
equipment. Sponsored for PEI membership by James Taylor, WaltersSup,
Lindenhurst, NY.
Texas installation and service company. Coastal Tank &
Testing, 1717 Strawn Road, Houston, Texas 77039, has applied for service and
construction division membership. Dana Alexander is operations manager for
the firm, which was established in 2011. The company installs and services
equipment at petroleum dispensing facilities. Sponsored for PEI membership
by Mark Barron, PtrSolutns, McAllen, TX.
www.coastaltanktesting.com
ADMITTED TO PEI
- Oil Trades Supply Corporation, Bellerose, NY (dis)
- Macnaught USA, Tampa, FL (mfr)
- HandyTube, Camden, DE (mfr)
- Riverland Community College, Austin, MN (aff)
- Professional Dispatch Services, Kingwood, TX (aff)
- Yongjia Sanjiang Petroleum Machinery Factory, Wenzhou,
Zhejiang, China (aff)
- UST Inspection Services, Inc., Cohasset, MA (S&C)
- Davis Petroleum Services, Inc., Charlottesville, VA (S&C)
- Jamie Beyore, Shell Canada Products, Burlington, Ontario,
Canada (O&E)
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Donald Brown, Schneider National Inc., Edwardsville, IL (O&E)
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