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The modern day fuel card: moving towards mobility

Date: 28 July 2016   |   Author: Debbie Wood

For many fleets, the traditional fuel card provides an easier way to control fuel spend, either by limiting where your drivers fill up, having a set price per litre, or analysing the data provided to train your drivers to be more economical.

The tide is changing, though. Fuel cards have been branching out over recent years, offering a variety of different management tools and expense payment options in a move to become mobility providers. And one of the biggest changes on the horizon is how we pay at the pumps.  

Virtual reality

Cardless payments are already here with apps like Apple Pay and Samsung Pay, which, if you have a compatible phone or watch, enable you to make payments in many retail shops without needing your credit or store card with you. There are plenty of benefits to using apps like these, the biggest being ease of use and reducing time at the shops.

Paul Hollick, managing director at The Miles Consultancy, the fuel card and mileage expense management specialists, believes virtual payments at the forecourts are well on their way, and the technology could be at the majority of UK fuel stations in as little as a year's time.

"We're currently developing tools where you no longer need a card. The way the market is going, we expect it to become the norm in the next 12-24 months," he says.

Fuel card giant Allstar believes that the introduction of this technology will take much longer, though, as independent fuel courts will need more time to it roll out.

"The trend is definitely moving towards a virtual card. We are currently speaking to a number of clients who want the capabilities," Brian Flood, vice-president of networks, tells BusinessCar. "It's going to take a long time for it to filter through to the independents, though, which make up a large chunk of the network currently."

Flood also believes a soft approach with customers is the best course of action, rather than forcing the new technology on them.

"We want to be leading edge not bleeding edge, and only take our clients down a path when they're ready for it. These things need to happen but I don't think the fuel industry will be leaders in it," he adds.

Shell was the first major fuel card provider to offer smartphone payments with its new Fill Up & Go app, which launched in 2015 in partnership with PayPal. Although currently just a retail proposition, it demonstrates how close the technology is to being introduced.  

James Fields, BP's fuel cards marketing manager, believes that virtual payments will not make the plastic card fully redundant, though; instead, the apps will offer an alternative way for drivers to pay.

"These payment methods are alternatives to traditional ones - not replacements. Technology does, and will continue to, impact the way we purchase things, including fuel. The key is to have the current benefits received via fuel cards, like capped costs and using loyalty cards, available across all these payment methods," he says.

More than just a fuel card

It's not just how we pay for fuel that is changing. Many fuel card companies now offer services far beyond the traditional sense, to help fleets more effectively manage vehicle costs.

Allstar introduced a new service, maintenance and repair payment service in April last year, which it says has already been well-received by fleets. It was upgraded in January 2016 from a transactional-based service (where you just use the fuel card to pay for SMR bills) to one that can also flag up to fleet managers when a service is due on each company vehicle.

"We're really pleased with how it's going. We've already got thousands of cars using the service," says Flood. "The beauty of the product is providing leasing company-style data to everyone. Fleet managers can now have access to a whole raft of information."

It's a subscription-based service, which currently has no additional fees attached and takes the responsibility away from the driver to alert their fleet manager when a service is due. The SMR bill is broken down at a granular level for each car, so trends and any irregularities in costs and damage can be spotted.

Other services fuel card providers offer include breakdown recovery, vehicle tracking and tyre replacement, usually by creating partnerships with third-party providers.  

BP launched a mileage-capture app in February 2015, which it claims has proved particularly popular with fleets that typically use their vehicles for both personal and private use.

"Drivers can use our mileage-capture tool to record, manage and submit their business and private mileage quickly and securely," says Fields. "Not only does this support legal requirements, but an automated system is obviously far more accurate than a manual one - something that's important when you consider research shows one in three people overestimate their mileage."  


An increasing trend with fuel card providers is the movement towards mobility management, with firms offering their fuel cards as a way to pay for travel costs like train fares and hotel bookings.

The Miles Consultancy believes that expenses and fuel cards go hand in hand in today's market.
"These days, talking about fuel cards and expenses are essentially the same thing," says Hollick. "We developed Fuel+ in 2013 and in reality it's more than a fuel card because it's an expense card. We need to work with more expense companies to integrate our services in a more seamless way, but we've moved the first few steps to becoming a mobility provider," he adds.

The fuel management system provided by TMC enables fleet managers to combine fuel spend, telematics and expenses information so that drivers can be audited to encourage a change in behaviour
and reduce costs.

Employees can use the card to pay for other travel costs, like hotels and public transport, and are able to choose which to expense to the business as a corporate cost on a dashboard-style system, and what should be deducted from their own salary.

According to the firm, fleets save on average 17.2% using its fuel management system; however, despite the savings, 90% of customers still choose to lock down the card to just fuel expense, demonstrating a reluctance for using additional mobility services.

One of the key issues with uptake, according to Hollick, is that the fleet manager is usually only managing fuel spend and is not responsible for signing off staff expenses.

"There's a reluctance to take on the additional expense responsibility, which usually sits in another department like HR or finance. There's not enough mobility managers out there overseeing all travel expenditure," he says.

TMC, when working with leasing companies, will also be able to provide a total cost per employee, something Hollick expects the firm to launch in the future as these new tools and technology gain traction.
"New technology is exciting. When we work with leasing companies we will be able to provide a total cost per employee for all costs including admin, accidents, lease, fuel and expenses.

There will always be keen early adopters and a few of our clients have already got in touch. It'll take time to build momentum, though - all new technology does, but with every generation it speeds up," he says.  
Allstar will be trialling a new Visa card next month that, like TMC, will enable drivers to use their fuel cards to pay for travel expenses and other business costs.

"We're really excited about this - it's been a long time coming. When we upgraded to chip and pin it took a lot longer than expected, but we've been able to introduce Visa capabilities at the same time," says Flood. Fleets will be able to lock down what drivers use the card for into categories such as travel expenses, hotels, business entertaining, and subsidiaries such as food, and then manage on an individual card basis.

Cost still a priority

How much you pay in transactional fees varies from one provider to another. Many charge nothing, while companies such as Allstar charge up to 2% of the total annual fuel spend, which could be a sizable amount if you run a large fleet.

"Reducing costs is a constant, never-ending struggle for organisations of all sizes," says BP's Fields. We have seen a significant reaction to the introduction of transaction fees by some fuel card providers in our sector. Some fleet operators are being charged transaction fees every time they fill up at the pump, which can amount to thousands of pounds a year."

Allstar claims that coverage is still a key consideration, and a large network is where savings can be made, despite the additional fees from their cards.

"The hidden cost of fuel cards is when drivers need to deviate off-route to refill. Coverage is everything," says Flood.

He concludes that the most important thing for fleets, when introducing fuel cards, is to have a proper strategy in place, and that new technology, although exciting, needs to deliver genuine cost savings to be useful.   

"If you don't have a policy on how you want your drivers to pay for fuel, or where, then you won't be able to maximise the savings or benefits. The fleet manager needs to know what they want to achieve before getting a fuel card," he says.   

Post-referendum volatility expected

With the EU referendum still very much on people's minds, fuel card companies are warning fleets to expect some uncertainly in fuel prices for the foreseeable future.

"Post-referendum there's likely to be volatility in fuel pricing for the short- and medium term," Robert Pieczka, managing director at FuelGenie, tells BusinessCar.

According to FuelGenie, fuel represents 25% of whole-life costs, and with fuel prices now rising again, up 10% over the past few months, reducing costs needs to be a short- and medium-term priority for fleets.
Working exclusively with supermarket forecourts, FuelGenie believes supermarket fuel still offers the greatest cost advantage to fleets, currently averaging around 3-4p cheaper than other sites.

"At the heart of it, cost still remains the number one priority for fleets. We don't charge any transactional fees so the savings are clear to see. Supermarket fuel makes up 45% of fuel sales. Having a supermarket fuel card is an easy way for fleets to save money," says Pieczka.

Another way to combat the rising prices is to introduce a price cap, something BP already offers to
its customers.

"Fleet operators have enjoyed a period of low fuel prices for some time, but diesel prices are now rising. Recently, we introduced a unique new offer that will help fleets cap fuel costs and enable businesses to protect themselves against diesel rising above the capped price while continuing to benefit from falling prices," BP's James Fields explains.

Customers who sign up to BP's Fuel Price Guarantee will pay a monthly fee and be invoiced at the capped price or the pump price - whichever is lower - until a pre-agreed volume is reached. Once the agreement expires, customers can choose whether to subscribe to the next available capped price or move to an alternative card