As the fuel card market evolves, the distinctions between providers’ offerings are becoming increasingly blurred. Features and benefits that once set companies apart are becoming standardized across the industry. This shift presents challenges and opportunities across the fleet ecosystem, but who will benefit?
Advancements in financial technology (FinTech) have sparked a new wave of competition in the fuel card industry. Innovators like Marqeta, Highnote, and Stripe are leading this transformation, revolutionizing credit card issuance and enabling businesses to create their own fuel card programs. These new programs can now compete with established industry giants such as WEX, Corpay (formerly Fleetcor), Voyager, and their subsidiaries, which control over 85% of the fuel card market.
Emerging fuel card companies like Coast, AtoB, Motive, and Roadflex already partner with these FinTech innovators to integrate finance into their software and distribute 'fleet' cards at scale through the Visa or Mastercard networks.
Visa and Mastercard
Visa and Mastercard have improved their fleet product technology and offer more precise controls at the product category level and enhanced level III data capture.
The granularity of fuel purchases is especially critical to fleet operators as it provides essential data points like merchant details, product codes (regular, mid-grade, premium), gallons of fuel, fuel price, vehicle info, driver info, and odometer- this is known as level III data.
In 2014, Visa and Mastercard captured Level III data at an estimated 50-60% of gas stations. In contrast, closed-loop networks like WEX and Voyager, which operate on proprietary, custom-built platforms, captured Level III data more than 95% of the time.
Source: WEX, Inc.
Through EMV chips and other tech advancements, Visa and Mastercard have increased their level III data capture to more than 90%, thus leveling the playing field.
Previously, the ability to capture Level III data and the controls based on product vs. merchant type prevented new open-loop competitors from entering the fuel card market. However, any company can now develop a fuel card program and compete with established industry players and new card providers with little distinction.
Visa and Mastercard will benefit through increased transaction payment volume on their networks.
Card Issuer-Processors
Companies like Marqeta, Stripe, Highnote, and others have a significant opportunity to delve deeper into the fleet vertical and guide fleets through the complex landscape of fleet payments. By offering services such as card issuing, processing, and creating embedded card experiences, these companies can partner with others in the fleet ecosystem to deliver a native ‘fuel card solution.' This embedded payment experience can streamline operations, eliminate the need for third-party fuel integrations, and generate interchange revenue.
Effectively communicating the correct value propositions while maintaining fuel card industry credibility can commoditize fuel cards, making them a standard offering for fleet management and software companies.
Fleet Management Software and Technology Companies
Motive was an early adopter in incorporating a fuel card offering into their suite of products. Fleet SaaS companies catering to a fleet customer base with fleet-related solutions can enhance their offerings by adding a native fuel card product. This addition provides several benefits to their customers:
Streamlined Operations: By integrating a native fuel card, fleet management companies can simplify and centralize their operations, reducing the need for multiple third-party fuel and maintenance integrations, creating a true ‘all-in-one’ solution
Enhanced Control and Monitoring: Fleet managers gain better control and monitoring capabilities over fuel expenses, improving efficiency and reducing the risk of fraud.
Increased Customer Satisfaction: An all-in-one solution enhances customer satisfaction by offering a seamless and cohesive experience from a single dashboard.
Revenue Generation: Companies can earn interchange revenue from fuel, maintenance, and other card transactions, creating an additional income stream.
Competitive Advantage: A native fuel card can differentiate companies from competitors and position them as comprehensive fleet management solutions providers.
Fuel Card Background
For a more detailed background of the fuel card industry, key players, and fuel card 101, please check out my previous post, Beyond the Basics: A New Approach to Choosing the Right Fleet Card
Conclusion
Innovation and technology have drastically lowered the barrier to entering the fuel card market, creating a unique opportunity for fleet technology, management, and software companies. In lieu of offering third-party integrated fuel solutions, organizations can provide their robust customer base with a native card solution and earn interchange revenue from their customers’ largest expense items-- fuel and maintenance.
If you have any questions or would like to model out building your own card program, please contact me via email or LinkedIn.
Geoff Meng
Fractional Fueling
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