Competition As The Driving Force For Better Fleet Payments

From back-office spend analytics to autonomous vehicles, fleet payment service providers are exploring a multitude of opportunities to address friction and enhance the payments experience for fleet drivers and fuel merchants.

Innovators have a lot of friction points to choose from, too. Some of the most popular targets include the challenge of reconciling and analyzing driver spend, or mobilizing fleet cards to support the transient nature of the fleet driver’s profession.

With innovations in connected cars and autonomous vehicles accelerating, some fleet payments players are jumping at the opportunity to explore how to address the challenge of a lack of fleet card acceptance at electric vehicle charging stations, or the opportunity of turning a vehicle itself into a payment mechanism.

Technological development is all well and good, but for some industry players, offering fleet managers the latest gadgets and digital tools won’t address a more deeply-rooted issue in the fleet payments industry: a lack of competition.

“There has been a ton of consolidation in the fuel card processing market over the last 20, 30 years — it’s down to just a couple of main players,” said QuikQ CEO Dean Troester in a recent interview with PYMNTS. “As far as the payments pay points themselves and how drivers pay for their fuel, I don’t think that’s a huge impediment for drivers right now.”

That industry consolidation, he said, has resulted in too many expensive fees both for payers and merchants accepting these new fleet card technologies — and without more service providers to choose from, businesses on both ends of the transaction have little choice in accepting those fees.

Troester did not mention any industry competitors by name, but he’s not the first to raise the issue of a lack of players in the field.

Earlier this year, another fleet payments company, Gas Pos, filed a lawsuit against industry leader FLEETCOR accusing the firm of anti-competitive practices and excessive fees.

“The current leaders in this industry must be held accountable at times to ensure competitive markets and fair pricing,” said Gas Pos Chief Legal Officer Cameron Hogan in a statement provided to PYMNTS in May, though he declined to comment on the specifics of the case, which was first reported by Bloomberg Law. “This benefits not only businesses in the point-of-sale markets, but all the gas stations, truck stops, fleets and ultimately consumers and the American people benefit from competition and fair pricing in this incredibly important market.”

Just weeks prior to news of the lawsuit, Gas Pos announced a collaboration with cloud communications solution Twilio. In that announcement, Gas Pos singled out FLEETCOR and another industry giant, WEX, noting that its collaboration with Twilio aims to “shift the balance of control in the truck stop payment ecosystem” and to allow fuel retailers to combat the “Goliath Problem” of “oligopolies.”

PYMNTS previously reported on the history of complaints against leaders of the fleet payments sector that seem to increasingly be facing accusations of anti-competitive conduct. They include a 2017 court decision siding with Travel Centers of America, which sued FLEETCOR over merchant fees, as well as a 2014 settlement between Comdata, acquired by FLEETCOR in 2014, and a class of fuel retailers in Pennsylvania.

Earlier this year reports in Bloomberg pointed to growing concerns among small businesses related to the fees charged by FLEETCOR to accept fleet cards. According to the publication, FLEETCOR charges more than 12 fees when drivers use a fleet card, including a transaction fee and per-gallon fuel charge.

Not everyone agrees that industry leaders are doing the wrong thing by charging such fees, however.

“[FLEETCOR] figures out the easiest way to make money,” said Jeff Lamb, a former FLEETCOR executive, in a previous interview with Bloomberg. “That’s not the dumb thing to do — that’s smart.”

FLEETCOR has also stressed in previous reports that all fees are compliant with regulatory requirements.

According to QuikQ’s Troester, however, a boost of competition in the market would be good for payers and merchants alike.

“As in any industry, if there are only one or two players, then there’s a bigger chance for rates to go up, whether you’re selling a product or a service,” he said. “There’s friction among fleets and truck stops in that there is a lack of competition, and they don’t have much say in the rates they’re going to pay.”

There is other friction in fleet payments, too, he acknowledged, but many challenges like paper and fuel card fraud have already been addressed by the solutions on the market today offered by QuikQ and other firms. RFID technology, for instance, promotes payment security and the ability to confirm that the correct vehicle was receiving the fuel at the time it was purchased, while Fuel Purchase System (FPS) technology automates the capture and analysis of a vehicle’s fuel usage data.

But as fleet payments innovation accelerates, Troester noted, the problem of a lack of industry competition will continue to place stress on drivers, fleet managers and merchants, who have been vocal in their frustrations with a lack of choice.

“We believe there’s an opportunity here,” he said. “Competition allows people to get more aggressive to try to get the right price points.”