By Keith Reid

The recent announcement that FLEETCOR Technologies, Inc. had closed its nearly $700 million acquisition of Cambridge Global Payments, a leading B2B international payments provider, underscored a trend among the dominant fleet card providers to branch out from their core markets in pursuit of related opportunities. As the company describes itself: FLEETCOR Technologies is a leading global provider of commercial payment solutions. The company helps businesses of all sizes better control, simplify and secure payment of their fuel, toll, lodging and other general payables. 

FLEETCOR is hardly unique in that aspect. Its leading competitor WEX Inc. has built up similar capabilities in similar markets.

John Coughlin

EPIC Market News spoke with John Coughlin, FLEETCOR’s EVP of Global Corporate Development to get his perspective on where the company is heading and what these developments mean for its core fleet services business.


EMN: How do these new market developments relate to the company’s traditional core competencies and history facilitating commercial fueling transactions?

Coughlin: Clearly our origins are in fleet cards and fuel cards on the fleet side. That was 90 percent of the revenue of the company for the first 10 years. We’ve been around about 18 years. And when we went public 90 percent of the revenue was still on the fuel cards.

But when you think about what a fuel card is, it’s really a payment vehicle that employers give employees to control expenses. So it’s sort of a B-to-B-to-E product, or what we call a work force payments product, locked down to a specific spend category or MIC code. When you think about our competencies clearly distribution to small businesses is a big one. Then issuing, processing and networks are the card capabilities. And then there is this management skill set developed in our legacy business where you realize our customers spend money on a lot more things than fuel, and why don’t we give them some payment solutions to help pay for those goods and services? So that led to the evolution of where we are today.


EMN: The expansion has been gradual over the years. What is FLEETCOR’s footprint today?

Coughlin: Less than half of our revenue today is from fuel cards, and we have diversified into five adjacent categories. In addition to fuel we have hotel cards, through a discount hotel payment vehicle and network called CLC.  Then we have corporate payments, which is really companies’ CFOs,  treasurers and heads of accounts payable departments using a virtual card product to pay their vendors on AP. We also have a road toll business. A huge expense for fleets is paying tolls so we own the top toll company in Brazil, and we have toll products in Europe. And then we have a gift card product solution where we provide the  loyalty and gift card platforms for major retailers.

So we’ve evolved over time so that we now think of ourselves as a type of commercial payments company, but we’re not an AMEX card where you can buy any category. Most of our payment products are locked down to specific spend verticals.


EMN: While some of these seem to be outside your core markets, you can clearly see some crossover opportunities with your legacy fleet card customers.

Coughlin: I think the one that might be most relevant is corporate payment. Companies pay a lot of bills—accounts payable. When we bought Comdata in 2014 everyone knew Comdata for their North America trucking fuel card business, but half their operations was the corporate payments business.

With that you go to a business owner or CFO or treasurer and say, ‘hey, you have maybe five people in your AP department paying all these bills. Why don’t we take that over and do a full AP dispersement for you?’ They let us know who to pay and if they want certain vendors to be paid by wire or ACH. But, we’ll pay as many of them as we can on a virtual card, which is a sort of a onetime use MasterCard. In doing so we’ll get interchange for those purchases. Typically, corporate B2B interchange will be 2.65 percent. So not only will we take away a lot of your costs in the AP department, but I will give you a rebate on your spend that’s on the card.


EMN: That creates an interesting incentive.

Coughlin: If we can migrate half of the spend on the card we’ll give a certain amount back as a rebate. For the first time, the AP department now becomes a revenue center.  you’re getting rebates on your spend.


EMN: How does the recent Cambridge acquisition fit in?

Coughlin: This may be less relevant to your readership, but when you go to a CFO or treasurer of a medium sized company most of its bills will probably be domestic vendor payments. But, it may be a manufacturer sourcing product from Germany or Japan or China. And it has to settle those bills in those local currencies. That’s what Cambridge does—international accounts payable payments. We have Comdata doing the domestic accounts payable, Cambridge doing the international and we can pay AP in 140 different currencies. The international AP market in terms of revenue for companies like FLEETCOR is just massive. It’s even bigger than the domestic payment opportunity.


EMN: Actually, a lot of our readership has business that crosses borders, at least in North America. Just how complicated are international AP payments that close to home?

Coughlin: If you’re a US company and you have a vendor in Canada, you have to first convert the payment into Canadian dollars. Then, with sending any money abroad post 9/11 there are a whole bunch of regulations that have come into effect. You have KYC—Know Your Customer—who are you sending the money to? And you have AML—Anti-Money Laundering. You have to report to the federal government where are you sending the money abroad to make sure no one is funding anyone who is shady. Both Commdata and Cambridge are licensed as money transmitters in all 50 states.


EMN: The opportunities seem clear and important for a company like FLEETCOR and its investors. But what about concerns among the legacy fleet card market –marketers, retailers and fleet operators—that their needs will still see priority attention?

Coughlin: It’s still half our revenue and it’s growing nicely, and we have thousands of salespeople and service people catering to that market today. It’s clearly a big part of the company and a big part of what we do. I think we just came to realization that the best end game would be that if we’ve got a distribution machine that can sell to customers, why not be able to sell them more than one thing? That doesn’t mean you lose focus of your heritage and your core base. We still see a lot of growth in the fuel card space and  it will always be a big part of FLEETCOR.


EMN: Will all customers, including the fleet card space, benefit from efficiencies with your expansion?

Coughlin: That’s the endgame. We have a proprietary, custom-built system called Global Fleet Net which we developed internally over seven years spending well in excess of $100 million, with the goal of consolidating our platforms over the long run. We now run all of Shell’s card processing globally—I think it’s 30 plus countries on our Global Fleet Net system. So it’s clearly battle tested and chosen by some big oil companies and we’ve converted several of the companies we’ve acquired to GFN and that migration continues.