The fuel card market has been fairly stagnant for the past decade with a handful of organisations dominating. Now a new player hopes to shake up the established order with an innovative product that combines mileage capture with fuel acquisition.
Payment services provider Barclaycard and mileage audit firm The Miles Consultancy (TMC) brought their Fuel+ product to market in March 2014, following two years of pilot trials with large fleets in the UK.
The combined offering takes advantage of the systems of both partner firms, using chip and pin Visa credit cards from Barclaycard to handle the payments, and TMC’s mileage capture software to reconcile business journeys.
The card itself is free, with a small monthly charge per driver for TMC’s mileage audit software, and they come as a pair.
Paul Jackson, managing director at TMC, and John Bostock, head of corporate and enterprise at Barclaycard Commercial Payments explain.
Fleet News: Why did you decide to enter the fuel card market, and how did your companies begin working together?
Paul Jackson: TMC has been in business for twelve years, and we’ve been providing fuel management for some of the largest fleets in the UK. Some of those felt their fuel company wasn’t able to provide the information they wanted, for both HMRC and finance departments.
We approached Barclaycard as a potential partner around five years ago. You don’t have to bank with Barclays corporately to have a Barclaycard, and that was key for us.
We took our time as we wanted to get it right, and invent something that wasn’t a traditional fuel card. We’re having to educate fleets on the benefits, and explain how it differs to any card they may have used in the past.
John Bostock: Barclaycard had also begun to look at the fuel card market independently, around the same time.
We discovered that, across Europe, around 70 billion litres of fuel are purchased annually on fuel cards – that really piqued our interest.
We came across TMC when looking for a partner, and their technical capability and passion for customer service impressed us – both of those are key for us. We have a reputation for innovation, and it looked like the combination of our established card player and The Miles Consultancy’s deep expertise in the fuel arena would work well together.
FN: How has the service grown over the past year?
JB: All 30 of the fleets piloting the service remain with us, and we now have 107 fleets using the Fuel+ card – and we’re growing rapidly.
The industry recognition has been great, and we’re pleased that we have been able to innovate in a sleepy market sector that has been dominated by a small number of players over a long time.
Having chip and pin is a key factor for us. It isn’t just useful for security, it’s great for coverage. A chip and pin card means you can use the growing number of self-service and pay-at-pump facilities. Barclaycard have been using chip and pin since 2003, so it isn’t new technology.
FN: How are you explaining what’s unique in your fuel card proposition?
PJ: If a fleet is looking to renew its fuel card contract, it’s possible that a fleet manager will pull the tender document from five years ago out of a drawer, and ask their provider if they can restrict fuel type, provide data on usage per vehicle, how many litres and the like.
We believe just 38% of odometer readings are accurate – and 27% of readings end in a zero. Until you put all these data sources together and properly audit them, you don’t get a true picture. Our systems let fleets understand the data that is actually important.
FN: Would you say some fleets are asking the wrong questions of their providers?
JB: Absolutely. Someone who already has a fuel card is used to the way it works. When someone issues a tender proposal, it’s likely to be very much based around the way their current or previous fuel card system has worked.
Capturing an odometer reading at the time of refueling doesn’t need to be a priority. That’s not what we do.
There is a lot of potential for errors: the driver has to remember the reading while queuing, the cashier has to enter it correctly into the till.
The other area that we want to address is the obsession with a pence per litre discount. We think the total cost of fuel spend is more important.
You may get four pence off per litre, but if your drivers have to travel further to get there you miss the point. We’re trying to get fleets to take a more holistic view of fuel spend.
FN: How are you planning to grow and develop your customer base?
PJ: We’ve now been approved and are listed on the Crown Commercial Service fuel card framework, which means we can now supply government and public sector organisations.
JB: Barclaycard are a big player in the public sector already – we have a dedicated commercial card team, and significant clients across both central and local government.
We know the public sector very well, but because we weren’t on the fuel card framework, we couldn’t provide an offering. The timing was great, as we’d just launched Fuel+.
PJ: We’re starting to see interest from pan-European fleets. Previously, they would have to use 15 cards across nine countries to get 80% coverage. Because of the Visa network, our single card can achieve 90% coverage across Europe.
JB: While we’ve won business from fleets operating in a wide range of sectors, we’ve also seen business growth from companies such as car dealerships and car hire firms – so it’s not just the traditional fleets taking advantage.
FN: How do drivers react to the mileage/card combination?
PJ: Drivers already have to capture some kind of data. The biggest problem with a spreadsheet or expense form is availability – you generally have to fill it in when you get home, or back to the office.
We’re giving availability to various tools. Drivers can submit details online, on an app, and even offer a facility to upload receipt photos if a driver has lost their card. The app will allow them to enter mileage, or they can just press start and finish at each end of the journey.
It’s actually been received by drivers really well – it makes the process easier for them.
It allows drivers to tell the system if the M1 was closed and they had to detour, for example, so they don’t get underpaid.
We also show the drivers their card statement at the end of the month, so they can spot any suspicious activity. Drivers can then help by self-auditing – remember, they’re paying part of the bill themselves.
FN: How does the money-back guarantee work?
PJ: We generally sign off a benchmark figure before the contract starts.
We look at the last 12 months – there are conditions, but it takes into account the price of fuel – and then find ways to save them money.
It’s written into the contract, and it’s not just our money on the line, it’s Barclaycard’s too.
After 12 months, we insist on going through the exercise, but we’ve never failed.
We generally deliver eight to 12 times cost savings – the money-back guarantee offers double money back if we fail to deliver.
There are a number of different ways we save fleets money on fuel spend as part of the process, from reducing mileage claims, ensuring VAT is processed correctly, and managing refueling locations.
While Barclaycard and TMC’s partnership is primarily providing services for large fleets, the launch has come at a time of change in the fuel card sector.
A growing number of fleets are tendering their fuel card services, looking to combine savings with management data. As fuel remains a fleet’s largest operating cost, Fuel+ looks set to make a dent in the UK market.
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