B2B Payments

WEX Could Take HealthCare Payments Virtual

B2B card provider WEX during this year’s second quarter saw spend volume on its virtual card grow by 26 percent, driven mostly by its relationship with travel agencies. With its newly acquired Evolution1 healthcare technology company, WEX may could bring the virtual card to the healthcare market. In an interview with PYMNTS.com, WEX CEO Melissa Smith addressed the company’s B2B ambitions in healthcare, fleets and co-branded card deals, and offered up her views on competitor Fleetcor’s rumored ambitions to acquire Comdata for $3 billion.

As B2B card issuer and processor WEX Inc. now begins the process of aligning its operations with newly acquired Evolution1 and delve more deeply into health care payments, the virtual cards WEX now offers to travel agencies and others globally eventually could play a role. But not right away.

In an interview with PYMNTS.com, company President and CEO Melissa Smith said WEX was attracted to Evolution1’s reputation in the health care industry and in its ability to bring the right technology to the relationships between third-party administrators, physicians’ offices, insurers and others in the health care payments process.

The companies completed their deal in June. Though not totally new to health care payments, WEX identified a need to acquire a specialist in the field to grow the business, Smith said.

“We were having wins, but the fact that we didn’t have that depth of expertise was something that was limiting our growth,” she said. “We also have this now brand in the marketplace ands frankly a management team that are experts in that area, and they can help leverage those relationships with our products.”

Smith foresees the potential to tie WEX’s virtual card product (there’s no plastic, just the same information that would be on a card) with online health care payments as well. In the travel industry, companies such as Priceline or Expedia use the virtual cards when booking hotel rooms for clients, which typically would pay those companies using their own consumer cards. By enabling the agencies to use the virtual card to pay for the rooms, WEX provides them with more controls in the payments process, she said.

“We’re able to create a one-for-one stream from the original consumer payment to what ultimately is getting paid to the hotel in a way that’s highly integrated into the travel agency’s system, and it enables them to lock down anything that’s happening outside that original authorization,” Smith said. “So they’re really able to look at things more from the exception basis.”

Though not an initial focus of WEX’s strategy with Evolution1, the company’s virtual cards could similarly help third-party administrators with their payments to health care providers, such as doctor’s offices, which is where Evolution1’s technology now plays a central role, Smith said eventually.

“Evolution 1 has sold its products into a third-party administrator and has strong relationships in that marketplace, so we’re looking to extend that payment relationship to the partner in a B2B relationship,” Smith said. “That’s the first area of focus from a synergy perspective. Longer term, there may be other options where can move from card to cardless.”

Q2 highlights

PYMNTS.com’s discussion with Smith occurred an hour before she spoke with analysts about WEX’s second quarter performance. During the period, she said, the company saw continued momentum with several new customer wins, most notably the first co-branded agreement by WEX Fleet One in a heavy-truck program. Smith declined to name the client.

“What we’re doing for Fleet One, which is our over-the-road program, is taking that same model where we’ve had great success into the over-the-road market,” she said. “The fact that we have a co-branded win for us is significant because it’s showing we can take that model that we’ve had successfully on the retail side and duplicate it then over the road.”

Also during the quarter, the company remained on track with its acquisition of ExxonMobil’s Esso card program, and it announced an agreement with Shell to process prepaid fleet transactions in Europe and Asia. WEX also signed a new private-label agreement with Sunoco.

Fleetcor/Comdata reaction

Asked to comment on competitor Fleetcor’s purported interest in acquiring Comdata for $3 billion, Smith dubbed the report as “entirely speculative.” That said, Comdata has businesses that run across those WEX supports, including fleet cards, over-the-road services and commercial payments.

“We feel very good about the position we’re in that we’re growing, how we’re positioned within the marketplace and how we’re winning business, regardless of what happens to Comdata,” Smith said in the PYMNTS.com interview.

Q2 performance

For the second quarter ended June 30, total revenues for the quarter rose 11.3 percent, to $145.8 million from $131 million during the same period last year. Net income also rose 1.7 percent, to $42.8 million from $42.1 million, according to the company’s earnings release.

WEX’s fleet card payment solutions revenues for the quarter totaled $145.8 million, 11.3 percent from $131 million. Other payment solutions revenues rose 18.2 percent, to $55.8 million from $47.2 million.

In the Fleet Payment Solutions division, fleet-payment processing revenue totaled $94.6 million, up 7 percent from $88.4 million a year earlier. Transaction processing revenue was $5.3 million, up 8.2 percent from $4.9 million.

The average number of vehicles serviced worldwide was approximately 7.9 million, up 7%, while total fuel transactions processed increased 6% to 98.6 million, WEX said. Payment processing transactions increased 6%, to 78.4 million.

Average expenditure per payment processing transaction increased 3% to $88.46. The average U.S. retail fuel price increased 2%, to $3.76 per gallon from $3.70 per gallon a year earlier. Total corporate card purchase volume grew 36%, to $4.3 billion from $3.2 billion.


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