hen payments industry experts speak of "value-added" applications, many merchant level salespeople (MLSs) naturally think of gift cards, check conversion, age verification and prepaid applications.

While all of these are fairly new and definitely valuable solutions, there's another niche product that can improve your merchant relationships and add dollars to your bottom line: fleet cards.

For many in the industry, fleet cards might seem a little "old school" when compared to other newer, applications, but recent changes in government payment programs, terminal solutions and processing technology might just provide the fuel you need to drive away with new revenue opportunities.

Fleet Card Processing

Fleet cards are special purpose cards designed for companies that own and maintain car or truck fleets and need an efficient and smart method to fuel and perform maintenance on these vehicles. Typical users include:

• Government agencies (e.g. post offices, highway patrol, military)
• Delivery services (e.g. UPS, FedEx)
• Utility and service repair/installation companies (e.g. cable, phone)
• Consumer goods distribution companies (soda, snack foods)
• Trucking companies
• Businesses that staff a local field sales force (pharmaceuticals)

Fleet cards allow businesses to better manage expenses for their car or truck fleets and to provide enhanced usage and purchase reporting to the fleet managers.

Although there are several issuers of fleet cards, the Voyager and Wright Express (WEX) brands comprise at least 90% of fleet card usage. Voyager currently has 1.4 million fleet cards in circulation; approximately 200,000 merchant locations accept Voyager's cards.

Wright Express has more than 4 million cards issued and more than 625,000 service provider locations accept it. Other issuers include Visa, MasterCard, Fuelman and Fleet One.

What's Different About Fleet Cards?

Don't confuse fleet card processing with a broader "fuel solution." Most large chain or franchise petroleum and convenience stores have integrated automated fuel dispensing (AFD) POS systems that accept fleet and a range of other card types.

Fleet card processing is the ability to authorize and settle fleet cards per the requirements of the issuers. It's typically performed on a terminal or via the phone.

Processing fleet cards requires an interface to the fleet card issuers and the ability to pass "Level III" data appended to the transaction record. Level III data include elements of Level I and Level II payment data, plus:

• Odometer reading
• Service type
• Net fuel price
• Non-fuel gross/net price
• Item discount amount
• Item description
• Item commodity code
• Item unit cost, item quantity
• Item unit of measure
• Item total.

The purchased items are mapped to product codes and reported back to the cardholder's business. This lets a fleet manager know, for example, if a truck driver purchases the right level of fuel, or gets the brakes fixed on a planned service maintenance schedule. The merchant keys in the product codes at the time of sale. There are about 60 pre-assigned product codes covering five broad categories.

Defining Target Market Opportunities

Fleet card processing is a solution for small- to mid-size merchants grouped under select Merchant Category Codes (MCC), which are primarily automotive-service related. Target MCCs for fleet card processing include:

MCC Code Description
5013 - Motor Vehicle Parts Wholesale
5511 - New Car Dealer
5521 - Used Car Dealer
5532 - Tire Stores
5533 - Auto Parts Store
5541 - Service Station
5571 - Motorcycle Dealers
5599 - Equipment Dealers
7531 - Auto Body Repair
7534 - Tire Repair/Re-treading
7535 - Auto Paint Shop
7538 - Auto Repair
7542 - Car Wash
7549 - Towing

While fleet transactions certainly represent a revenue stream, most merchants that currently accept fleet cards process 20 times more bankcard volume than fleet volume.

The real revenue opportunities come from uncovering new prospects and selling them new equipment that combines fleet card and bankcard processing, as well as "up selling" to existing merchants in your portfolio that qualify for fleet card processing.

Further, this solution adds another "hook" into the merchant, improving retention and the overall value of your relationship.

The Right Time for Fleet Solutions

Recent changes in government payment programs, terminal solutions and processing technology have expanded the opportunities for fleet card processing. Take the time to learn about the solutions available on the market and map out a plan to target merchants that can accept fleet cards.

Not only will you sell them an integrated solution for bankcard and fleet card processing and settlement, but you might also discover that they are a good candidate for other value-added services, including electronic check conversion (auto service/repair merchants) and electronic gift cards (auto parts and car wash merchants).

The Government Services Administration (GSA) is one of the largest users of fleet cards. As of July 1, 2004, vendors previously paid by Visa or with a government check for repairs to GSA Fleet vehicles will now be paid solely by Voyager.

This change will significantly improve the GSA's ability to manage its vehicle fleet and provide increased protection against misuse or fraud. Transactions for services, repairs and maintenance totaling less than $100 will be charged on the Voyager fleet card and can easily be processed on a payment terminal.

For charges exceeding $100, the merchant must call the GSA maintenance control center for authorization. The option to be paid by Visa or by Visa Check is no longer available.

Terminal and processing solutions have also come a long way. Historically, most solutions that support fleet cards fall into two categories. They are either integrated POS systems from Petro/C-store software vendors, which are often expensive and cost prohibitive for small to mid-size merchants, or they are low-end terminals, such as the Tranz 380 x 2. The low-end terminal is more cost effective but very limited in feature set.

MLSs can attract merchants accepting fleet cards by offering an integrated/multi-app terminal solution that not only supports split-dial capabilities to connect to ADS, the fleet issuer and the bankcard processor, but also combines all settlement and reporting functions.

Plus, in many terminal fleet environments, the fleet card issuers pay merchants monthly on a 30-day cycle for settled transactions. An integrated solution-processing network, such as the NOVA Network, can provide MLSs with a specialized fleet/bankcard terminal and the ability to settle most transactions through one network, typically daily.

The value proposition to merchants is simple and rich. They have one solution for all payment processing, they can obtain consolidated reports and statements, and receive their deposits much more quickly.

Now that's a value-added application to get fueled up about.

Michelle Graff is Vice President of Marketing for NOVA Information Systems. You can e-mail her at michelle.graff@novainfo.com .