Regan Brown
Fuel cards can be a convenient way to manage your business fleet and fuel costs, but they come with a range of fees that can impact your bottom line. The cost of a fuel card depends on the card company and the type of card selected. There are two main types of fuel card pricing: retail and cost-based. Retail pricing is based on the price listed at the pump, while cost-based pricing is determined by the market-related fuel cost provided by entities like the Oil Price Information Service (OPIS). Some fuel card companies also offer discounts at specific brand-name locations, but it's important to compare the pump price with the discount to ensure you're getting the best deal. Fuel card fees can include account setup, monthly card, transaction, invoice, late, and program administration charges, as well as hidden costs such as network service fees and replacement card fees. These fees can add up to significant expenses for your business, so it's essential to research and compare different providers to find the most cost-effective option.
| Characteristics | Values |
|---|---|
| Cost of fuel card | Depends on the fuel card company and the type of card |
| Retail fuel card pricing | Based on the price listed at the gas pump; rebate provided later based on fuel purchased |
| Cost-based fuel card pricing | Based on the market-related fuel cost provided by entities such as the Oil Price Information Service (OPIS) |
| Fuel card fees | Account setup, monthly card, transaction, invoice, late, program administration, network service, annual membership, replacement card, risk-based |
| Fuel card providers with no fees | fuelGenie, P-Fleet |
| Fuel card providers with discounts | Pump saver cards, CFN, Pacific Pride, Texaco Fastfuel |
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What You'll Learn
Retail vs cost-based fuel card pricing
Retail and cost-based pricing are the two most common types of fuel card pricing. Retail fuel card pricing is based on the price listed at the gas pump. With this option, you pay the retail price upfront and receive a rebate later based on the volume of fuel purchased. Fuel cards tend to use retail pricing because of the wider availability of retail truck stops and fuel stations compared to members-only stations for commercial vehicles with fuel cards.
Cost-based fuel card pricing, on the other hand, is set using the market-related fuel cost provided by entities such as the Oil Price Information Service (OPIS). This means you pay the OPIS-determined price instead of the full retail price, which can be beneficial when driving in places with high transportation costs. With the cost-plus model, you pay a rack price based on the OPIS nationwide index, plus state and federal taxes, and a fixed fee set independently of the station’s pump price. The cost-plus model is often more cost-effective in places like California or Hawaii, where the cost of transporting fuel to retailers is higher.
The retail-minus pricing structure, in contrast, involves drivers paying the posted pump price at a fuel stop, including the cost of fuel, taxes, and a retail margin covering all expenses of doing business. The "minus" refers to the rebate that the fuel card provider pays you later based on the gallons purchased. Retail-minus pricing is typically more advantageous in areas like the Gulf Coast, where fuel is cheaper and margins are thinner. One benefit of retail-minus over cost-plus is that its pricing is more transparent, as there is little explanation as to how cost-plus OPIS index prices are set or changed.
When deciding between retail and cost-based fuel card pricing, it's important to consider your unique needs and market conditions. Fleet fuel cards can be a valuable tool for businesses with extensive transportation needs, helping them save on gas and control expenses. They offer benefits such as purchasing limits, cost management and tracking across drivers and vehicles, and the ability to choose when and where fuel can be purchased.
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Hidden fees
Fuel cards can be an essential tool for businesses that manage vehicle fleets, helping them efficiently handle fuel expenses and streamline operations. However, the benefits of fuel cards often come with various hidden fees, which can impact their overall cost-effectiveness.
Firstly, each fleet card has a unique fee structure. While some cards charge a flat monthly fee, others charge a smaller amount per card, which can become costly for large fleets. Some fuel cards also charge an annual membership fee, which may be charged per card issued, and a network service fee for each transaction. Certain providers also impose a risk-based fee of up to 24p per litre.
Inactivity fees are another common type of hidden fee, charged when a fuel card is not used for a certain period, typically between one and three months. This can be problematic for businesses with irregular fuel needs. Minimum usage fees are similar, charged when a card does not meet a specified minimum spending threshold. Administrative tasks such as changing limits, adding or removing vehicles, and updating company information might also come with fees.
Some fuel card providers charge an issuance fee for each new card, which can be costly for businesses with large fleets. Additionally, losing or damaging a fuel card can result in a replacement card fee, and some providers charge for expedited shipping. While electronic statements are often free, some providers charge a fee for providing paper statements, which can become a recurring expense for businesses that require hard copies.
Finally, using a fuel card at a station outside of the provider's network can incur a non-network fee to compensate for higher transaction processing costs.
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Discounts and rebates
The cost of a fuel card depends on the fuel card company and the type of card selected. There are two main types of fuel card pricing: retail and cost-based. Retail pricing is based on the price listed at the pump, and you'll receive a rebate later based on the amount of fuel purchased. Cost-based pricing is determined by the market-related fuel cost provided by entities such as the Oil Price Information Service (OPIS).
Retail pricing is more common due to the wider availability of retail fuel stations. With this pricing model, you may be charged a small amount above the pump price, such as 2¢, 3¢, 4¢, or 5¢. Some providers also charge an additional fee for drivers who don't use selected petrol stations, which can add up to 6p per litre.
Cost-based pricing is only used by two major West Coast fuel cards: CFN and Pacific Pride. This pricing model can offer better prices than average retail prices.
Some fuel cards offer discounts when fueling at specific brand-name locations. For example, you might get 5¢ off per gallon when fueling at 76-branded locations. However, branded stations may have higher prices than other gas stations in the area, so it's important to consider the overall cost.
Fuel card companies may also offer special rebates as incentives to sign up, which revert to a standard rebate after the promotional period. Rebates are typically based on the volume of fuel purchased at the issuing brand's locations each month and are received as a credit on your invoice or billing statement. For example, WEX customers can earn 1¢ to 3¢ per gallon when fueling outside their nationwide savings network.
Some fuel card providers, such as fuelGenie and TCS Fuel Card, advertise no additional fees for normal business use and no transaction fees.
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Merchant limitations
Some fuel cards offer discounts at specific brand-name locations. For instance, you may get a discount on fuel at 76 branded locations, but the overall price may be higher than at other gas stations in the area. Some fuel card companies have negotiated with certain stations to get their fuel cards accepted at cash prices, which are usually lower than credit prices. This type of discount works well for trucking companies that rely on truck stops as their main source of fuel.
The merchant determines the amount of the authorization hold, but the customer's bank determines how long the hold stays on the card. For Visa, Mastercard, and Discover, merchants are liable only for the amount of bad purchases over $100. American Express determines its limits based on contractual relationships with merchants.
Fleet cards allow you to purchase fuel from service stations, and some also permit you to pay for other vehicle-related expenses such as maintenance from auto repair shops. However, they usually cannot be used for general business purchases, so you may need to provide employees with an additional business credit card.
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Tracking driver purchases
Fuel cards can be a convenient tool for tracking driver purchases and controlling company fuel expenses. They can be used to monitor fuel purchases and create fuel reports, providing valuable insights into cost trends and helping to identify fuel fraud or misuse.
There are two main types of fuel card pricing arrangements: retail and cost-based. Retail pricing is based on the price listed at the pump, and you receive a rebate later based on the amount of fuel purchased. Cost-based pricing, on the other hand, is determined by the market-related fuel cost provided by entities such as the Oil Price Information Service (OPIS). This means you pay the OPIS price instead of the full retail price.
When choosing a fuel card, it's important to consider the fees associated with the card. Some fuel cards have hidden fees, such as annual charges, network service fees, and replacement card fees, which can increase your overall costs. Additionally, some providers charge extra for drivers who do not use specific petrol stations, and there may be additional costs for paper copies of invoices or failed payments.
To effectively track driver purchases and optimise your fuel costs, consider integrating your fuel cards with GPS fleet tracking software. This allows you to monitor fuel transactions, identify non-fuel purchases, and detect potential fuel fraud. Odometer tracking is another valuable tool that can help lower operating costs by facilitating the creation of MPG reports and making it easier to schedule vehicle maintenance.
By utilising fuel cards and taking advantage of their tracking and reporting features, you can gain valuable insights into your fleet's fuel usage and driver behaviour, enabling you to make informed decisions to optimise your fuel costs and overall efficiency.
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Frequently asked questions
The cost of a fuel card depends on the company and the type of card you choose. Some companies charge a flat monthly fee, while others charge a fee per card. There may also be additional costs for things like account setup, APR, check processing, and program administration.
Fuel cards offer discounted fuel prices, helping businesses save money on fuel costs over time. They also provide an efficient and easy payment process, saving time and effort compared to purchasing fuel with cash. Additionally, fuel cards allow you to control and manage your spending by setting budgets and purchase limits, reducing the risk of theft and fraud.
Popular fuel card providers include fuelGenie, which offers minimal admin fees and no card or transaction fees; TCS, which offers fuel discounts and zero transaction fees at in-network truck stops; and P-Fleet, which provides transparent pricing information for its CFN and Voyager cards. Other options include AllStar, EFS, and Porter Freight Funding, each with its own pricing structure and benefits.
