If you’re a business owner and haven’t heard of fuel cards before, you’re missing out on substantial savings on fuel, easier management of driving related expenses, (i.e. for payroll and tax purposes) plus drastically reduced rates of fraud for your business.
The UK fuel card industry is massive, with over 2 million fuel cards in circulation in the UK. It’s also where we get a lot of our petrol price data from. Our data partner Experian Catalist, record fuel card transactions across the UK each day in 8000 stations and this purchase data is what is you see displayed in the price engine.
What is a fuel card?
A fuel card is a payment card which allows drivers to purchase fuel for the vehicles they drive for business purposes. This removes the need to use their own cash or cards to purchase fuel. As well as getting a reduction in price there are a host of other benefits associated with it, as outlined later.
In addition to the card itself, fuel cards also give account managers direct control on which additional services they can be spent on, such as vehicle repairs and maintenance. They also have useful features such as real time reports and detailed invoicing, making administrative processes more efficient, saving time and cutting costs.
How do fuel cards work?
Fuel card companies buy oil on the wholesale market they can exchange the value of that oil through what is known as the oil futures market. Every time a fuel card customer uses a fuel card to buy some fuel, the discount is applied to the cost of fuel for that end user, like a credit card where the discount can be a few pence per litre.
The fuel card company reimburses the petrol retailer by paying them back in fuel they bought at wholesale price. The price at which the oil was bought is lower than the cost it was sold at, therefore both fuel card operator and petrol retailers enjoy a good return on the margin generated via fuel card customer sales, so much so that they can still afford to give a few pence a litre away as a discount to the customer.
The benefits of fuel cards for businesses
More and more companies, fleets and hauliers are starting to realize the benefits of using fuel cards.
The most obvious advantage is a nationally consistent wholesale pump price set weekly, and is often lower than those on the forecourt.
There is also no interest on purchases or APR rates which will further cut costs for a business. Reductions of just several pounds per vehicle will quickly result in significant monthly savings for an entire fleet.
Companies that run fuel cards also offer detailed management reports accessible online, which include useful metrics such as site details, real time reports, fuel amount drawn and vehicle registration.
It is easy to see if there are any abnormalities in the reports received from the vehicles that are managed, and one can pinpoint exactly as to why there are any unexpected figures if they arise.
Most fuel card providers offer PIN verification, as well as additional security features such as options to limit the amount of fuel purchased and the ability to link each card to a vehicle or driver. These features help to prevent fraud.
For complete peace of mind, a business can cancel a card if it is lost or stolen from the comfort of their office.
Furthermore, fuel cards can only be used to purchase fuel or closely related services such as tolls, car washes, ad blue and other types of related products, (e.g. these additions can be pre-selected by the account manager). This is a distinct advantage when compared to a credit card which can of course be used to buy anything.
Parameters such as transaction, frequency and volume limits can also be set.
All of this means a much-reduced chance for lost or misspent money and less hassle for employees as they won’t have to handle cash advances, use their own personal credit cards, or keep receipts, the system records it all via the cards as they are used.
A company will also save time and money on administrative costs, as they can be sent one invoice payable via direct debit, rather than having to claim back potentially hundreds of paper receipts.
Where do you get fuel cards from?
There are numerous companies that provide fuel cards. Many of the major fuel retailers such as BP and Esso offer various fuel cards, as well as many independent companies, specializing in cards for truck and haulage companies.
Fuel cards come in all different shapes and sizes as they are designed to suit different business users.
You’ll need to factor in network size, pricing, online services, range of service stations available with that provider and management reports available when deciding which one to use for your company.
If you’re a small business, you’ll want one that your drivers can use anywhere to prevent time being wasted looking for a certain brand.
If you send vehicles abroad a lot, you’ll need to get a fuel card that can be used in European fuel locations as well for example.