How electric vehicles will make or break U.S. Bank’s fleet card business

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The fleet card industry is deep in the throes of change, with many truck drivers still switching from clunky paper-based payments to mobile technology with streamlined, data-laden payment apps. The next big challenge is the rise of electric vehicles (EVs), followed eventually by self-driving cars and trucks.

Autonomous car fleets are still largely theoretical, but fleet card giants like FleetCor, WEX and U.S. Bank are working to adapt their proprietary fuel card systems to include EV charging stations. A key factor is the government-operated trucks, buses and cars that will gradually shift to electric technology in accordance with budgetary and environmental mandates.

This story is the last in a four-part series on innovation stemming from the fleet card market. Follow these links to view the first, second and third articles in the series.

An electrifying strategy
Just as petroleum-based fleet card platforms enable managers to control the price, location and type of fuel drivers purchase, EV fleet cards will provide similar controls for where and when drivers plug in vehicles to be recharged. The U.S. EV charging market is forecast to reach $18.6 billion by 2030, according to a recent report from Wood Mackenzie Ltd.

For U.S. Bank, pressure to be at the forefront of EV fleet cards is great, because it has a significant stake in government fleet cards through its Voyager unit. U.S. Bank Voyager and WEX are the only two providers approved to bid on contracts to provide fleet card programs to U.S. government agencies.

“We have a very high acceptance rate for fleet maintenance and fueling locations across the U.S., and our goal is to have a card program that continues to cover all the energy needs for fleets of all sizes, from cars up to heavy-duty commercial rigs,” said Travis Lachinski, U.S. Bank’s vice president and product manager for freight payments.

To demonstrate its commitment to electric power, U.S. Bank Voyager last year became the first fleet card program with nationwide EV acceptance through a pact with ChargePoint, the nation’s largest EV charging network. It’s not an exclusive partnership—WEX already had an earlier, narrower acceptance agreement with ChargePoint—but being the first to add national EV acceptance was significant for U.S. Bank.

Campbell, Calif.-based ChargePoint provides free-standing charging for consumers and businesses located across the U.S. and other markets it serves, plus it provides cloud-based software and services for companies that power up their own fleets.

Fleet vehicles typically recharge back at their corporate base, but when the whole fleet charges simultaneously at the end of the day, it can create costly energy demand peaks. ChargePoint’s software helps companies balance when and how many vehicles charge at once.

“Electric vehicle fueling is a whole paradigm shift, especially in the fleet business, because the variables of when and where vehicles are charged can make a huge different in cost,” said David Peterson, director of fleet solutions at ChargePoint.

To gain a technology edge, ChargePoint in June purchased Kisensum, a maker of fleet management software that applies telematics to optimize energy use. The combined operation now has the tools to manage EV charging for all vehicles including buses for public transportation, corporate cars and trucks, taxis and—eventually—autonomous vehicles, Peterson said.

“This isn’t going to be like flipping a switch—the transition to EV is going to happen over the next 12 to 15 years—but change is happening rapidly within the infrastructure for the energy and payment systems to support it,” he said.

A rush of new technology
The EV transition isn't the only shift U.S. Bank must prepare its fuel client for; there's also the EMV transition, or the shift to chip-based cards at the pump.

The card networks' deadline for most retailers to adopt EMV was October 2015, but they acknowledged that gas pumps are much harder to upgrade than point of sale terminals. In some cases, upgrades could require breaking the concrete underneath pumps and installing new underground wiring. Thus, the card networks postponed the deadline for gas pumps to October 2020.

Though fuel stations had five years longer than mainstream retailers to upgrade to chip cards, many are still working to refit pumps with more complex card readers, and they will be pressed for time to make the software changes needed for EMV, Lachinski said.

U.S. Bank partnered with Mastercard to adopt its more broadly accepted EMV specification for the new chip-enabled Voyager Network fleet cards that it began distributing to corporate customers this summer.

“We could have developed a separate spec for Voyager, but that would require many oil companies to write new POS software to accept our chip card. Instead, our new chip cards will fit the broad Mastercard spec, simplifying EMV-readiness for most merchants in our network,” Lachinski said.

U.S. Bank is also working to crunch the vast amount of data it provides fleet operators down to more manageable levels.

“ 'Big data' doesn’t mean anything—what companies want is information they can take action on, so we’re creating a new data analytics system with that power,” Lachinski said.

Fleet managers using the dashboard of Voyager’s Fleet Commander platform will soon be able get instant broad status reports on fleets, or zoom in on specific regions and vehicles to spot problems and investigate anomalies, he said.

“A fleet manager can click on the big picture or the small picture anywhere to get specifics on possible fraud or situations where employees are making special requests, with a very simple interface that’s easy to use,” Lachinski said, noting this dashboard replaces processes that required more steps and manual analysis of available data.

That level of density is increasingly important for organizations working to cut costs by eliminating waste, he said.

Corporate payments are currently booming at U.S. Bank. During the second quarter, corporate payments volume hit a seven-year high, up 11.7% over a year earlier, with activity almost doubling for business that includes commercial and digital payments, T&E and fleet card spending, U.S. Bank CFO Terry Dolan told analysts during an earnings call.

Many federal agencies will begin the next round of bids for fleet card programs this fall, when Voyager will compete for business from various federal programs through the GSA’s SmartPay program. That includes the U.S. Postal Service, a longtime fleet card customer for U.S. Bank.

Though U.S. Bank doesn’t break out Voyager’s performance, it’s clear that this year could be crucial for maintaining momentum in a highly competitive industry.

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Fleet cards EMV Mobile payments U.S. Bank