Numerous articles and online resources offer introductory insights into ‘choosing the right fleet card.’ However, for leaders managing larger fleets with substantial fuel expenses and complex operational requirements, the process entails more than simply selecting a card with universal acceptance, discounts, and controls—while important, these items are table stakes.
Understanding the industry and its key players is essential for selecting the appropriate fuel card program. Below is a list of card providers in no particular order:
WEX
WEX (NYSE: WEX) offers a suite of card products and programs that operate on its proprietary, closed-loop network. The company provides fuel cards for most oil companies and gas stations, including Shell, ExxonMobil, Chevron, ConocoPhillips, and many others. These cards can be configured for acceptance at specific brands only or universal acceptance. However, fleets typically only receive discounts when fueling at the specific brand on the card.
In addition to the branded programs, WEX also offers fuel cards for most Fleet Management Companies (FMCs), such as Holman, Wheels, LeasePlan, Enterprise, and Element. Furthermore, WEX partners with many public and government fleets, offering dedicated fuel programs for this vertical.
In 2016, WEX acquired EFS to serve the needs of the 'over-the-road' (OTR) segment. EFS operates on its proprietary network at truck stops and offers a dual-network Mastercard for gas stations.
FleetCor
Fleetcor Technologies (NYSE: FLT) recently announced its plans to rebrand as Corpay (NYSE: CPAY). The company offers a wide range of fleet products and expense management solutions under various brands, including Comdata, CFN, and Fuelman.
These brands offer programs tailored for small, large, and Over-The-Road (OTR) fleets. Like EFS, Comdata provides a dual-network card featuring a proprietary network at truck stops and a Mastercard network for other fueling stations, charging stations, maintenance, and more.
Fuelman boasts a robust discount network with rebates available at over 50,000 sites. However, it's worth noting that increased fees may be associated with fueling 'out of network.'
In addition to the brands listed, Fleetcor also offers fuel cards for popular retailers such as Arco, Casey’s, BP, and others.
Voyager
Voyager is a subsidiary of U.S. Bank (NYSE: USB). Like WEX, it operates on its own proprietary network and is accepted at over 95% of stations.
Voyager partners with various oil, leasing, and energy companies that re-sell the Voyager fleet card and utilize the Voyager network. These partners include Cenex, CountryMark, Global Fleet, Mansfield Energy, LeasePlan, and others.
Some of these partner companies may also work with WEX. In some cases, card resellers may offer competing card networks, allowing clients to choose the network that best suits their needs.
Additionally, Voyager offers a dual-network card (Voyager + Mastercard), enabling users to purchase items other than fuel and maintenance.
The Emergence of Next-Generation Fuel Cards
Recent advancements in financial technology (FinTech), particularly in the card issuing sector, have spurred a new wave of competition in the fuel card industry. Companies such as Marqeta and Stripe have revolutionized the issuance of fuel cards, enabling businesses to distribute "fleet" cards at scale through the Visa or Mastercard networks.
Among the emerging competitors in this space are AtoB, Motive, RoadFlex, and Coast.
Fuel Card 101
Understanding the basics of fuel card economics is pivotal for maximizing their value. Most fuel cards require you to pay off your balance in full every billing cycle, resulting in zero interest charges, so where do fuel card companies make their money?
Interchange.
Interchange fees are charges merchants (such as gas stations) pay to cover the cost of processing and supporting credit card transactions. Interchange fees vary by card network and type of transaction, but fuel transactions are typically 2.5%.
Fuel card companies earn an approximate 2.5% margin from interchange fees. They often share some of this revenue with customers through discounts at the pump or basis point rebates. The revenue shared can vary based on factors such as gallons, transaction payment volume, merchant category, and payment terms.
Understanding these economics helps businesses make informed decisions when selecting and using fuel cards for their fleets.
Open vs. Closed Loop Networks
The rise of modern fuel card companies has seen a shift towards open-loop networks such as Visa and Mastercard. Open loop cards typically limit purchases based on MCC codes (Merchant Category Codes). For fuel, MCC codes are commonly 5542 for 'Automated Fuel Dispensers' (at the pump) and 5541 for gas stations and purchases made inside. Enabling MCC code 5541 allows drivers to purchase fuel inside the store, but it also permits other purchases like snacks, drinks, and tobacco.
However, before switching card profiles to allow only fuel transactions exclusively at the pump, verifying whether the fuel card has an EMV chip is crucial. Not all outside fuel pumps accept chip cards, which may require drivers to complete the transaction inside, resulting in a different MCC code and potentially allowing unauthorized purchases.
While updated EMV compliance statistics are challenging to obtain, research suggests that 70-80% of merchants accept chip cards at the pump. Some merchants or gas stations opt not to upgrade their pumps due to the high capital expense associated with the upgrade, leading them to require drivers to complete transactions inside.
This can pose a challenge for fleet and fuel management. Allowing only fuel purchases at the pump may cause operational disruptions while permitting drivers to go inside could result in purchases other than fuel. Ironically, many card companies tout significant fraud savings yet cannot restrict purchases exclusively to fuel.
Closed-loop cards, on the other hand, do not rely on third-party networks like Visa or Mastercard. They operate on proprietary networks, allowing for more precise controls and the ability to restrict purchases at the product level. Closed-loop networks can permit fuel, maintenance, and fluids while restricting snacks, tobacco, soda, and beer.
Acceptance is the primary differentiator between open and closed-loop networks, although not in the way one might expect. Closed-loop networks are still widely accepted at approximately 95% of gas stations. However, closed-loop cards may not be accepted if the fleet/fuel card is intended for purchases outside of fuel or maintenance, like travel, entertainment, or supplies from Home Depot or Lowes. To address this concern, many card companies are building or investing in 'dual networks' - proprietary networks for fueling and the Mastercard network for other expenditures.
Cash vs. Credit Price
Many gas stations and truck stops offer both a 'cash' price and a 'credit' price for fuel, with the 'cash' price typically being 5 to 10 cents per gallon cheaper than the credit price.
But why is this?
According to the National Association of Convenience Stores (NACS), gas stations face average credit card processing fees of about 2.5%. The difference in price between cash and credit is intended to cover these processing fees. While some fleet cards may honor the cash price, others may charge the credit price.
The 5 to 10 cents per gallon difference between cash and credit prices can significantly impact expected savings, so fleets need to consider both options when filling up.
Payment Terms & Payment Method
Another complex but important consideration when selecting a fuel card program is its payment terms. For Over-The-Road (OTR) or trucking companies, payment terms tend to be more expedited compared to light-duty or mixed fleets. OTR fleets often have daily or weekly billing cycles with a net payment window of 0, 3, or 7 days after the billing cycle ends.
On the other hand, local or light-duty fleets typically operate on monthly billing cycles with a net 14-day payment window (30/14). Some vendors may offer, or even require, expedited terms such as weekly billing with weekly payment or weekly with net 0 terms. It is essential to understand the nuances of various payment terms, what can be negotiated, and their impact on the overall offering.
Another critical factor is the payment method. While many newer card providers mandate linking a checking account for direct payment withdrawal, some legacy providers offer more flexible payment methods. When choosing a payment method, it's crucial to consider your company's cash flow and accounts payable processes.
Regardless of the payment method chosen, failure to make payment by the due date can result in account suspension and costly late fees, rendering the cards inoperable and causing significant operational disruptions in the field.
Integration Considerations for Fuel Cards
A company's fuel card should serve as a strategic tool that seamlessly integrates with other systems utilized by your fleet. Whether it's telematics, a Fleet Management Company, a Transportation Management System (TMS), bulk fueling, or other technologies, the data must be shared effectively across the entire fleet technology stack.
However, not all "integrations" are created equal. Some integrations utilize Application Programming Interfaces (APIs), enabling real-time insights and data exchange. On the other hand, some integrations rely on pushing flat files to share fueling data, which may not provide actionable insights in real time due to the frequency of data exchange and the processing of posted or pending transactions.
Bottom Line
Fuel is a top expense significantly influencing a fleet’s operation and overall profitability, so choosing the right fuel card program is imperative. Working with an industry expert can help navigate the complexities and ensure that the chosen fuel card aligns seamlessly with the fleet's unique needs. Beyond securing favorable discounts, rebates, and payment terms, consultants are pivotal in balancing other important factors like fraud mitigation, reporting requirements, and integrations with existing systems. By leveraging their experience, fleets can optimize operational efficiencies, safeguard against potential risks, and ultimately enhance their bottom line through strategic fuel card selection.
While this article only scratches the surface of the nuances associated with commercial retail fuel payments, Fractional Fueling was created to aid fleets in managing these intricate challenges. If you have questions about how Fractional Fueling can benefit your operation, please reach out directly.
Geoff Meng
Fractional Fueling
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