By Maura Keller
The fleet fueling industry originated in the late 1970s around private label fleet cards, which were primarily issued through petroleum marketers who owned bulk fueling locations and needed a method for dispensing fuel into commercial vehicles—other than through a dispenser attached to their bulk fueling station.
“The solution was found in the form of a technology called ‘cardlock,’” said Shane Dyer, president of PowerUp Fleet. “This automated fueling system enabled a petroleum marketer to set up a fueling location, often directly attached to the bulk plant tanks, and issue cards that provided their customers with both security and control over their employees’ purchases.” PowerUp Fleet is a leading authority on commercial fleet fueling. They support over 100 clients nationwide in designing, marketing, and supporting their proprietary fleet card programs. Their expertise includes the evaluation, design and implementation of transaction processing systems, fleet fueling based accounting system implementation, sales force automation and customer relationship management specific to fleet fueling, and sales force training services.
As Dyer explains, in the mid to late 1980’s, the petroleum marketers who owned these cardlock locations formed cardlock networks that allowed each other’s customers to share the facilities under reciprocal agreements.
“These agreements ensured that the fuel purchased by the customer using a reciprocal location would be based the wholesale cost and not a retail price” Dyer said. “This enabled the petroleum marketer to expand their footprint of locations whereby they could offer both a competitive price and enjoy the greatest margin possible.” These networks were owned and managed by petroleum marketers who were mutually dependent upon the viability of the network.
On a concurrent path, owners of service stations had commercial customers buying fuel under house accounts. These were simply ledger cards that recorded the fuel purchased and subsequently were billed to the business.
“There was no security, control, or detail similar to the cardlock fueling option,” Dyer said. “However, major oil companies recognized the need to assist their dealers in carrying the credit for these accounts and began developing ‘fleet credit cards.’” These cards were limited in functionality; however, they worked in every location that was branded by the major oil company. In time, these card processing services developed by the major oil companies morphed into what our industry now recognizes as universal cards.”
These two parallel paths progressed separately until early 2000, where the industry began a consolidation and merger of the fleet card options. The reciprocal cardlock networks began integrating retail fueling locations under their model, and universal cards began integrating acceptance into the cardlock locations. As a result, there occurred a blending of two distinctly different fleet fueling experiences.
“Jumping forward to today, our industry has gone through a major consolidation of card processors whereby most fleet card options that petroleum marketer might consider engaging are limited to those offered by Fleetcor, WEX, Inc, or Voyager–all multinational corporations focused on the growth of their transaction processing services,” Dyer said. “In this transformation, the core value of proprietary cards treasured by the petroleum marketer and fleet customer alike are being diminished. Most important is a loss of control over their customer base and destiny. As a result, petroleum marketers are seeking proprietary card solutions that return control so that they can isolate and protect their hard earned customers.”
Technological Advancements
Ramel Lindsay, U.S. Bank Fleet Product Manager said data collection on today’s fleet cards is more sophisticated and more comprehensive than ever, and that data is being integrated with information from other sources to help organizations operate their fleets more and more efficiently.
“As resources and time become more constrained, fleet managers find it very important to have systems in place that can pool all of their fleet-related data rather than have it reside in separate buckets,” Lindsay said. “This integrated approach greatly improves financial forecasting, risk management and pricing, among other things.”
In the case of the U.S. Bank Voyager Fleet Card, every card transaction captures 117 pieces of information. Whether you need a high level glimpse of operations or a microscope into specific activity, it’s as easy as setting report parameters.
“Fleet managers can be more ‘surgical’ in their fleet management decisions because they can get specific real-time information on vehicle location, fuel usage, speed and mileage. They can compare reports month-to-month or year-to-year, going back as long as three years to detect patterns,” Lindsay said.
More private label card programs also are now offering options for “cardless” purchases in emergencies or at times when purchasing with a card is not an option. For example, this year U.S. Bank launched U.S. Bank Fleet Virtual Pay. As Lindsay explained, when a driver can’t use the Voyager card, for an unexpected repair in an unexpected place, the service provider calls a toll-free number to get a unique, single-use account number for a cardless transaction.
“The number is generated by MasterCard, which effectively extends the Voyager Card’s reach beyond the Voyager network of 230,000 locations to all MasterCard-accepting locations,” Lindsay said. “At the same time, the transaction generates the detailed “Level III” data, based on MasterCard Fleet prompting and capture, our Voyager Network customers expect – information like odometer reading, fuel type selected, gallons pumped and price per gallon. This gives organizations greater visibility and control over driver spending.”
Advantages Aplenty
According to a recent industry survey, the fleet market in the United States represents $235 billion annually, with only $85 billion currently being charged to a fleet card product.
“The opportunity for proprietary fleet cards is huge, and thus why the stocks of Fleetcor and WEX have been skyrocketing,” Dyer said.
An overall fleet services approach typically encompasses vehicle leasing, maintenance, and logistics in addition to fuel. “Fuel is the No. 1 expense and priority for most fleets,” Dyer said. While many companies are trying to bundle all of these components into a single service, most businesses are going to work with the fleet fueling provider who offers the best value.
That value is a composition of controls, efficient fueling environments, reporting, and competitive price.
“The truth of the matter is, there is no real value in bundling your fuel with a total service provider, and it often ends up costing you more than if you were to strategically work with a proprietary card issuer,” Dyer said. The concern of data integration is simple, as a proprietary fleet card issuer, you have to use billing systems capable of producing the data that can be imported into the Telematics or fleet maintenance systems.
“Petroleum marketers who secure fleet fueling customers are developing a clientele that they can directly control and influence over a long-term business relationship,” Dyer said. This is in contrast to retail customers that can ebb and flow in and out of your site.”
As Dyer explains, with fleet customers, they are going to be bound to using your locations because you offer a controlled fueling environment that reduces or eliminates unauthorized purchases, expedites the fueling process to allow their employees to be more productive, and provides complete accountability over their fuel consumption.
“The most appropriate customer for a fleet card program is a business with employees driving vehicles where they are concerned about control and security,” Dyer said. “A mom and pop operation is less likely to value the programs being offered. Petroleum marketers who invest in a proprietary fleet card program rather than partnering with a major card issuer enjoy better control and profitability as they don’t have to share both valuable customer information and revenue.”
In Part 2, which will run next week, we will looks at embracing and optimizing the successful programs that are available today, what’s on the horizon and a look at safety and security in fleetcard programs.
