B2B Payments

Fleet Cards Caught In Crosshairs Of Corporate Card Fee Debate

Fleet payments company FLEETCOR is facing criticism over fees associated with its fleet cards, according to reports in Bloomberg last week, which small businesses (SMBs) say are too high. The issue mirrors the debate over payroll card fees, and raises new concerns over fees linked to card products for businesses, including interchange fees.

The publication reported late last month that FLEETCOR charges “more than a dozen fees” for professionals to use the card, including a $.10-per-gallon or $2-per-transaction fee noted as an account administration charge. There are also fees linked to paying card bills via wire transfer, and fees if the fleet cards go unused.

FLEETCOR posted $2.2 billion in revenue since its initial public offering (IPO) in 2010, reports said, with shares climbing more than 780 percent during that time. Consumer advocates and some small business customers are criticizing the company for the fees, saying they take advantage of customers.

However, former FLEETCOR executive Jeff Lamb disagrees.

“The company figures out the easiest way to make money,” he told Bloomberg. “That’s not a dumb thing to do — that’s smart.”

Regulators have not accused the company of wrongdoing, and FLEETCOR said all of its fees are lawful and comply with regulations. In a statement sent to the publication, the company noted that its customer retention rate, as of last October, was 92 percent.

“The majority of our more than 800,000 business customers are very satisfied with the value we provide,” the statement said.

Yet, reports said there have been 366 complaints filed with the Federal Trade Commission (FTC) against FLEETCOR since 2014. WEX Inc., the company’s main competitor, saw only 44 complaints filed against it during that time.

“This is a business model intended to deceive,” said Andrew Left, founder of Citron Research, in an interview with Bloomberg in 2017.

Not The First Fee Controversy

The debate over fees associated with payment card products for corporate users is not new. Recent years have led to discussions over similar fees associated with payroll cards that companies use to pay their employees, with several states initiating legal action over fees dubbed predatory.

Analysis in 2015 from the National Consumer Law Center (NCLC) found that employees in Missouri and Kansas were hit hardest by payroll card fees imposed by issuers. Last year, the New York State Supreme Court revived efforts to introduce stricter regulations on payroll cards in an effort to combat excessive fees. Not to mention, a class action lawsuit filed in Pennsylvania that settled in 2017 led to $3 million to be paid to McDonald’s hourly employees for damages linked to payroll card fees.

As a result of this controversy, some regulators and payroll card companies have introduced their own efforts to nix excessive fees, and ensure that employees are educated on the fees they will be charged and how to avoid them.

Bloomberg noted that fleet cards are not subject to the same rules as consumer credit cards. With few options for relief, some companies hit by FLEETCOR fees have either stopped paying their bills, cancelled their accounts or are seeing refunds from the company.

Interchange Fee Debate

With some B2B card products raising the debate over fees charged to business users, there have also been concerns over interchange fees associated with commercial cards, as legislation’s cap to fees does not apply to commercial credit card products. Interchange fees are among the biggest challenges for corporate card acceptance, according to Boost Payment Solutions Founder and CEO Dean M. Leavitt in an interview with PYMNTS last year for The B2B Payments Tipping Point Playbook.

“We would hear from issuers — who would hear from some of their commercial cardholder customers — that some suppliers had opted out of card acceptance,” he said, adding that Boost’s introduction of dynamic interchange rates could help boost acceptance among suppliers.

While regulatory efforts to cap excessive interchange fees have not typically applied to commercial cards, there is a growing movement in Australia to ban interchange fees altogether, including commercial card swipe fees — though the nation’s banking industry is speaking out vigorously against the effort.


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.