Wex outlines plan for future of Esso fuel cards

With around a quarter of a fleet’s budget consumed by fuel, decision-makers are on constant look out for products and services that offer a pain-free way to lop substantial sums off their annual bill.

So it is with fuel cards. No one disputes their value: in addition to the financial savings, they can reduce fraud and simplify admin processes.

But, fleets can enter a minefield when deciding which supplier to select. Do you go for the one with the extensive fuelling network? Or do you prioritise the potential greater savings of a small card provider? Do you opt for pump price discounts, hedging, Platts pricing or fixed pricing models?

Indecision can leave company car drivers with wallets bulging with cards as fleets look to cover all the bases. 

One relative newcomer believes it can cater for all options with its card proposition. Wex may not be a household name, but it’s one of the world’s largest fuel card companies with a substantial presence in its American home market. 

It entered the UK four years ago with the purchase of Esso Card from ExxonMobil, forming Wex Europe Services in a joint venture with payment and fleet services company Radius. Last year, it started to invest significant sums in its field team, network and online account management tools in preparation for an assault on the fleet sector.

The process to get to this stage has been protracted. Wex acquired the customer base, staff, incumbent systems and licences across Europe, and spent the first couple of years getting to understand the business.

In an honest appraisal, commercial and marketing director Peter Dore says the card was “not attractive” due to a lack of fuel stations compared with rivals. It was also not well resourced. Both issues have been addressed.

“We now have a branded wholesale network with 16 reseller partners,” Dore says.

A game changing moment was when BP came onto the network in a reciprocal deal: Wex now has 1,300 Esso, 1,000 Shell and 1,200 BP sites on its fuel card, which represents 45% of the UK fuelling network. 

The number of cards in circulation across Europe has risen from 1.1 million to 1.4 million while, in the UK, the number of litres sold has increased by 6-10% each year since the acquisition to around 225,000 in 2018. 

“We have also increased our headcount in the UK which has led to more direct sales and our resellers are also expanding their networks which makes it an easier sell,” says Dore.

Almost half its fuel volume is sold through resellers, a falling proportion (it was 60% a few years ago) as Wex grows its direct business, currently at 8,000 accounts.

The customer profile in the UK is also evolving. Exxon had focused on corporates with large fleets but they are also the businesses now restructuring their benefits policies to offer cash which is reducing their fleet sizes.

Consequently, Wex is now concentrating on a more diverse customer-base. Much of its growth over the past two years has been with SMEs, particularly courier and home delivery businesses. 

Like all fleets, they have two defining priorities when looking for a fuel card partner: network coverage (“always the first question”) and price.

“Esso is now the largest network in the UK by number of sites so when fleets look at mapping, location and route planning, we can prove the business case,” says Dore.

When added to the Shell and BP outlets, it’s a tick for the network then, despite being half the size of Allstar. So, what about pricing?

“When the pump price is high, there is more focus on pricing,” says Dore. “But it also depends on the segment size and the customer’s main driver.

“For example, large companies are often linked to Platts pricing on the wholesale but smaller business owners just want the convenience of fuel cards and the ease of admin. They are less interested in the wholesale price; they just want the discount on the pump price.

“We also offer fixed pricing across the Esso network for the week ahead which can offer good savings if you have a fleet which uses a lot of motorway services.”

One pricing model Wex doesn’t offer is hedging. 

“I’ve seen too many examples of customers being caught out,” says Dore. “The upsides are high but so are the downsides and we are a low margin, high volume business – the risks are too high for everyone.”

Best price options

While Wex has no influence over the pump price, its data enables it to advise fleets about the best pricing options by geographic location.

In London, for example, prices are higher which suits a fixed price model; Bristol is cheaper which suits pump pricing. Regardless of the method, the UK is fortunate to have a stable pricing structure – a claim which might surprise those who believe prices are constantly fluctuating.

“In Germany, prices can change 10 times a day,” says Dore. “Here, there is always a lag up and down.”

The UK is the most mature fuel card market in Europe, with an estimated 80%-plus penetration on vans. Sales calls unearth a non-user less than 10% of the time and those are primarily smaller businesses and sole traders.

“When it’s companies with five vehicles or more, it is hard to find one which doesn’t have a fuel card,” says Dore.

Growth, then, comes primarily from conquest, not expanding the market.

Mileage monitoring

However, there is one area where Wex has identified an opportunity: cars. Most of its business is with van operators and it wants to plug a hole in its product portfolio with a new mileage monitor product which will ease the measuring of business and private mileage. 

It is in talks with potential partners and expects to launch the service this year, strengthening its proposition for car fleets.

Dore also points to the online account management tool which includes an app for users, enabling fleets to order and cancel cards, view usage and for drivers to identify their nearest fuel station.

Wex also has some HGV customers, which is the most volatile of markets. Truck fleets tend to have a number of fuel card partners and will select the cheapest one on a weekly basis. It’s a low margin business.

In contrast, corporates are increasingly likely to plump for one primary fuel card, sometimes with an emergency back-up option. Few have contractual obligations which makes it easier to win business.

Future product developments will see the cards link to toll transactions, including the M6, Dartford and Severn Crossing, with clean air zone and congestion charging under consideration. Wex is also looking at adding other payment options, such as full travel solutions with hotel payments, food and secure parking – all items required while travelling for business.

Meanwhile, over in the US, the company is assessing how smartphones can link to the car to identify vehicle location, mobile location and the pump location. When the three match up, the card is released for payment, preventing fraud. “All that technology will start to drip into the UK,” says Dore.

He is also looking at pre-payment cards for companies where credit is more of an issue. Leasing companies, especially in mainland Europe, also see pre-payment as an opportunity to win business by offering, say, £50 of free fuel as part of a leasing agreement with a new customer.

Amid all the new developments sits one undeniable truth. Fleets and their drivers are moving away from petrol and diesel towards electric – and that poses a big risk to fuel card providers. Wex recognises the need to evolve.

“BP and Shell have bought businesses; we are looking at which partner to go with,” says Dore.

“We have to have a way to service payment needs of electric vehicles either on our card or through another device. EVs are gathering pace but there are also other options such as hydrogen. Esso is also growing algae.

“However, our forecasts are for commercial volumes to continue to grow for the next four to five years.”

He adds: “We have to be aware of the developing technology, but key for us is to engage customers and understand their needs.”

He is also looking at pre-payment cards for companies where credit is more of an issue. Leasing companies, especially in mainland Europe, also see pre-payment as an opportunity to win business by offering, say, £50 of free fuel as part of a leasing agreement with a new customer.

Amid all the new developments sits one undeniable truth. Fleets and their drivers are moving away from petrol and diesel towards electric – and that poses a big risk to fuel card providers. Wex recognises the need to evolve.

“BP and Shell have bought businesses; we are looking at which partner to go with,” says Dore.

“We have to have a way to service payment needs of electric vehicles either on our card or through another device. EVs are gathering pace but there are also other options such as hydrogen. Esso is also growing algae.

“However, our forecasts are for commercial volumes to continue to grow for the next four to five years.”

He adds: “We have to be aware of the developing technology, but key for us is to engage customers and understand their needs.”

Helping fleets to use less fuel

Wex has added a telematics proposition to its fuel card through partner Radius which it hopes will boost loyalty levels by reducing the price elasticity.

Targeted primarily at smaller fleets, it comes as either a ‘plug and play’ solution or – Wex’s preferred option – a fully integrated hardwired product.

David Holdcroft, Wex European group sales director, says: “All the data is presented to the fleet through a web portal that is overlaid with our fuel card data.
This will show fuel spend versus driver behaviour and highlight within set parameters the behaviour that can be changed to make fuel savings, such
as speeding, idling and use of air-con.”

He adds: “It might seem counter-intuitive for a fuel company to help fleets reduce their fuel, but we have to be focused on what the customer wants because that creates stickiness and loyalty. They will be less likely to leave for a fraction of a penny on fuel.”

The system, already installed into more than 5,500 vehicles, also offers real-time location tracking, while Radius is developing daily vehicle checks as part of
a roadmap of new releases.

One future solution could see the telematics talking to the pump so the driver can fill up and leave without making a physical payment.