Businesses Seek New Ways To Pay For Charging Their Growing Fleets of Electric Vehicles

EV charging

The transition to electric vehicles (EVs) and the continuing digital transformation that’s been accelerated by COVID are driving changes and anticipated growth in the business payments industry.

Those are two of the imperatives being focused on by FLEETCOR Technologies, executives said Tuesday (Feb. 8) during the business-to-business (B2B) specialty payments solutions provider’s quarterly earnings call.

In addition to meeting the needs of those trends, the company is expanding its total addressable market (TAM) by moving into some markets adjacent to those it already serves.

“We do plan to work these three midterm imperatives hard: EV, digital and diversification,” FLEETCOR Chairman and CEO Ron Clarke said during the call.

EV Recharging Proving to be More Expensive Than Anticipated 

In EV, FLEETCOR has added public recharging points in both the U.S. and Europe and has invested in EV software companies that facilitate reimbursement for home recharging.

So far, the company has found that the revenue from EV services is roughly in line with those from its traditional refueling services. Clarke said that earlier in the EV transition, there was a misconception that recharging would be less expensive than refueling. In fact, he said, it recharging costs more than people expected, especially when it’s done at a public recharging point.

“So, the first misconception is, it costs $50 to fill up a van and only $5 to recharge a van — that’s not true,” Clarke said.

Another thing that people may not have anticipated is the amount of recharging of business vehicles that would happen at employees’ homes. Because this is happening away from public recharging stations, it has created an opportunity for a company like FLEETCOR to help businesses see that it is measured and reimbursed.

“There’s more money helping businesses in this thing, and it’s going to cost them more than they think,” Clarke said.

Digital Transformation Changing Customers’ Expectations 

The second trend driving changes in the industry — the continuing digital transformation — has led customers to expect to be able to make purchases digitally, with no human intervention, and to make transactions without cards.

To meet these demands, FLEETCOR enables digital sales, uses digital advertising and provides user interfaces that allow clients to do more themselves, faster and easier. It also enables point-of-sale transactions with mobile phones, RFID technology and connected cars.

“Last year, over 50% of our global fuel card sales came in digitally, and over half of those processing end to end with no human intervention,” Clarke said.

Lodging Services Needed by Airlines, Homeowners Insurance Companies 

Beyond those changes, FLEETCOR is diversifying its portfolio to include what it has identified as some higher growth segments. For example, its corporate payments business, which has traditionally been a middle markets business, is now entering the small and medium-sized business (SMB) space.

Also, the company’s travel or lodging business, which has traditionally focused on blue-collar workforces, now helps airlines provide lodging for their crews and helps homeowners insurance companies provide lodging for policyholders who have been displaced by a fire or water damage at their home.

“So, over time, we do expect these adjacencies to increase the opportunity for each of our businesses,” Clarke said.

In the three months since the previous earnings call, the company formalized its partnership with a bank in Brazil that will help distribute its products, formally launched its Corpay One SMB platform business and completed an investment in an electric vehicle software company. It also completed the rebranding of its corporate payments business, with all the brands now under Corpay.