A fuel card, or fleet card, is a payment card which can be used to pay for fuel such as gasoline, diesel and other fuels at gas stations. The card can be linked either to the driver or the vehicle, or both. As Johan Fagerberg, co-founder of Berg Insight says, a fleet fuel card can only be used at designated locations for specific transportation-related charges.
The cards work across a network of authorised merchants and provide details of each transaction, enabling fleet managers to better control their expenses. Fleet companies are typically billed through a group invoice for purchases from all drivers. This eliminates the need for individual drivers to keep track of receipts, e.g. for tax purposes, thus reducing the administrative burden. Compared with conventional credit cards, fuel cards do oftentimes not have as much fees, e.g. recurring charges, transaction fees, etc.
Cash price advantage
Discounts on the actual fuel are generally offered for fuel card holders. Fuel cards generally allow trucking companies to pay the cash price at the pump, which typically represents a discount of several cents per gallon from the credit card price. Additional discount programmes may also offer fuel rebates when using a fuel card. Over time, the cash price minus a negotiated discount typically adds up to significant savings compared to paying with regular credit cards.
Fuel cards are available in a wide range of options provided by various players such as the major oil brands including Shell, BP, ExxonMobil and Chevron, banks such as USBank (Voyager) and Citibank, as well as companies specialised specifically in fuel cards and similar offerings including Fleetcor, WEX and Edenred. The major players WEX and Fleetcor with annual revenues of around US$ 1.5 billion (€1.3 billion) and US$ 2.4 billion (€2.1 billion) respectively in 2018 both offer numerous fuel card alternatives under different brands.
Many fleet management solutions support integration with various fuel cards. There are also fleet telematics players offering their own branded fuel cards such as the GPS Insight Fleet Fuel Card powered by WEX. Several benefits can be realised through the integration of fuel card and fleet telematics data.
By combining data sets from fuel cards and fleet management systems, customers can gain insights into overall expenses and driver efficiencies through the use of smart reporting tools. Fleet managers can for example obtain a more complete view of their fleets’ activities by combining vehicle location data and fuelling data.
Integrated reporting functionality can for instance be used identify potential fuel card abuse or misuse. Customers can track fuel card usage and automatically find suspicious card transactions using smart algorithms that minimise fuel card fraud.
Exception reports can for example be triggered if a fuel card transaction at a specific gas station is not matched with the GPS location data from the fleet management system at the time of the transaction. Fuel slippage reporting can also be used to identify events where the fuel card was used and where more gas was pumped than the vehicle’s tank can hold.
In addition to minimising the risk of fraud by verifying fuel purchases with location and vehicle data, it is also possible to facilitate management of regulatory compliance (e.g. IFTA) by avoiding manual reporting procedures. Additional benefits associated with fuel card integration include the fact that fleet customers can access all the relevant information related to the business in the same application instead of using separate interfaces for fuel card and telematics data respectively.
Fuel card players have over time broadened their operations beyond conventional payment solutions to adjacent markets such as electronic toll collection and telematics through collaborations and M&As. Notably, the major fuel card provider WEX has even offered partnered-powered fleet telematics solutions to its clients for a decade, working with partners including GPS Insight, Verizon Connect and Geotab.
WEX’s main competitor Fleetcor chose a different route when entering the fleet telematics space. In 2013, Fleetcor acquired the personal navigation leader Telenav’s enterprise business offering mobile handset-based solutions for mobile workforce tracking and vehicle tracking solutions based on dedicated on-board devices.
In the same year, Fleetcor also acquired the US-based GPS fleet tracking and vehicle management solution provider NexTraq. In 2014, Fleetcor together with Summit Partners furthermore acquired the major European fleet management provider Masternaut.
Fleetcor however later divested NexTraq to Michelin in 2017, a decision which centred on the conclusion that there were insufficient synergies with its core payments business to stay invested in the space. Nevertheless, other players are in the coming years expected to engage in efforts to integrate fleet telematics solutions with fuel cards and other adjacent systems.
The author is Johan Fagerberg, co-founder of Berg Insight.