B2B Payments

Is The Fleet Card Business Fueling Up?

The fleet card market is expected to grow $35 billion by 2019, a more than $20 billion increase from its current value. However, it still remains a highly fragmented and underpenetrated sector. Providers’ abilities to negotiate discount deals with fuel companies seeking more visits to their stations certainly have an advantage, but issuers realize they need to step up their game. Will the introduction of new technologies help heat up the fleet card business?

As innovators look for new fuel card contracts, their ability to attract interest will depend on something that many in payments perceive to be a commodity – payments processing.

Unlike gas cards, whose sole purpose is to purchase fuel, fleet cards support fuel purchase and maintenance among authorized fuel and maintenance merchants within a network. And that means they must provide detailed per-transaction reporting.

Unable to control what gas costs at the pump, companies have turned en masse to the use of fleet cards to mitigate some of calamitous effects of spiking prices. Such payment cards allow managers to track costs, negotiate pricing and lower fleet overhead by eliminating inefficient paper-based reimbursement processes.

When drivers use a fuel card, it’s crucial that fleet managers have access to all data connected with that transaction. Approximately 30 percent of that data is lost because it’s simply not captured.

And that’s where being able to see Level III data comes in handy, WEX’s Michael Lingman said in a recent PYMNTS.com interview.

Level III data identify not just the when and where behind a purchase, but also the who, what and why, which represents the most important details, he said.

"Most credit cards can extract when a driver fuels and how much s/he purchases, but Level III enables fleet card users to capture that and more,” Lingman said, noting that details such as odometer readings also can be recorded.

Purchase cards that have this level of security also require driver and vehicle identification numbers, which set it apart. At the point of sale, drivers must enter their ID number or the transaction cannot be completed.

Properly used tools create what Lingman calls a “closed loop” network. Generic bankcards may put some limitations on purchases, but the closed-loop option can specify what a driver buys at different locations. For example, a fleet manager could restrict purchases at a specific fuel station to only include fuel, oil and service charges. If the driver attempted to buy a drink, that purchase would be denied.

The combination of fuel card data, telematics and analytics technology has helped fleets save money on fuel by making sure drivers know exactly where to find discounts and spot mechanical problems before they happen.

According to a recent Fleetbeat report from Fleetmatics, telematics helped decrease fuel consumption by 573 million gallons per year, resulting in $2.2 billion in savings. Moreover, carbine dioxide emission dropped by 5 million tons annually, and payroll hours dropped by 1.3 billion, resulting in a total savings of $34.9 billion in payroll savings.

"The savings almost double amongst fleets that have focused idling-elimination programs in place,” Fleetmatics said. “Fuel savings represent one of many avenues by which significant savings can be achieved with the use of commercial telematics. When you add this to the savings derived from reduced payroll hours, increased fleet productivity and utilization, and minimized harsh driving and idling, for example, the monetary savings can far exceed $45 per vehicle."

In addition the introduction of wireless technologies is poised to replace actual plastic card payments.

Is Big Data In The “Fleet” Cards?

A recent MarketsandMarkets study reveals that the commercial fleet and trucking industries, where telematics and other M2M communications are standard have an advantage over other sectors when it comes to embracing big data. According to the report, increased competition, CO2 emission control norms and rising fuel costs are a few of the issues making fleet management systems essential to modern fleet management. Data can reveal operational efficiencies by monitoring vehicle performance and mileage; improve operational reliability and safety, maintenance planning, driver control, and optimizing navigation and routes—without a system to present the data, its value is lost.

Pending policy changes will also bolster the amount of data processed by fleets every day. In India, built-in GPS units are now required in cabs, including those of aggregators like Uber. The move is framed to improve passenger safety, but it will also provide a wealth of information to fleet managers.

When it comes to embracing “big data,” the commercial fleet and trucking industries have an advantage over other sectors. Fleets are already high-tech, as telematics and other M2M communications are standard for many fleets. The challenge isn’t collecting data, but harnessing the power of it. The report cites several opportunities where OEMs can monetize the insights of Big Data, from entering business segments other than automotive to growing revenues from value added services such as warranties and service.

Fleets are getting smarter, and so are the systems used to manage them. It is important to know that although data is clearly poised become a game-changer for fleet management managers, they are not ready for it. A recent survey reveals that managers aren’t comfortable with letting data lead the decision-making process.

Which technology will then take fleet management innovation to the next level?

Leave your comments below.

——————————–

Latest Insights: 

With an estimated 64 million connected cars on the road by year’s end, QSRs are scrambling to win consumer drive-time dollars via in-dash ordering capabilities, while automakers like Tesla are developing new retail-centric charging stations. The PYMNTS Commerce Connected Playbook explores how the connected car is putting $230 billion worth of connected car spend into overdrive.

Click to comment

TRENDING RIGHT NOW

To Top