By Shane Dyer
At what point does the FTC consider consolidation in an industry monopolistic? This is a question being asked lately by those dependent upon fleet card payment processing services, including independent card issuers and trucking companies alike.
The announcement this week that WEX, Inc. is acquiring EFS follows shortly on the heels of Fleetcor acquiring Comdata last fall. This is WEX’s second major fleet related acquisition since buying FleetOne in 2012.
We have seen a culmination of mergers over recent years that is centralizing control and power within these two companies. Today, Voyager, which is owned by US Bank, remains the only significant fleet card provider outside of the Fleetcor/WEX juggernauts.
This means many things for our industry. First of all, the consolidation will surely lead to increased fees. As competitive forces are removed from the market, there is less incentive to discount products and services in order to gain market share. About a year ago I conducted a fairly extensive survey of several Over-The-Road (OTR) trucking companies with the objective of identifying the reasons they chose their fleet card provider, why they stayed loyal and how they rated their past providers. A couple of things became apparent.
First of all, EFS, which also owns TCH and T-Chek, appeared to be actively trying to grow their business by reducing or eliminating fees to the trucking companies. As the smallest of the three players in the OTR market, this seemed an obvious strategy. Lower or eliminated fees were the most often cited reason by those surveyed for leaving either Comdata or FleetOne. With EFS being rolled into WEX, we see no other mature OTR solution to generate a similar level of competition.
The survey of OTR companies also revealed another concern the FTC should be considering. Several of the trucking companies had left Comdata or FleetOne because of credit or support issues. Where are they going to turn to now, especially those who are dependent on the OTR focused services such as Express Cash and various OTR system integration points? The implications of this consolidation are sure to have an effect on the competitiveness within the transportation industry as smaller, more challenged OTR fleets find it increasing difficult to acquire the necessary services outside of the “Big Two.”
As for my primary constituency, the petroleum marketers issuing fleet cards, I have two points to make. Heaven forbid if we wake up one morning to learn that Voyager has been acquired. Hopefully the FTC would not allow this to happen. At some point the regional fleet customer who has been carrying one of the Big Two cards is going to become more and more likely to recognize your value. You actually may become their only choice if they have determined that neither of the other two are compatible with their business. Maybe this represents a small silver lining for the independent card issuers striving to not be affected themselves by this unprecedented consolidation.
Shane Dyer is the president of PowerUp Fleet, Inc. He possesses over 32 years petroleum automation, operations, and executive management experience with a focus on commercial fleet fueling and cardlock networks. PowerUp Fleet, Inc. provides sales force automation/CRM solutions specific to the petroleum industry along with sales training, sales management, and executive consulting services. Contact: (541) 388-5120 or [email protected] and visit PowerUp Fleet at: www.powerupfleet.com
