Driving Innovation: VISA’s Role in Fleet and Mobility Payments

Speaker A: Foreign.

Speaker B: Jeans presents Voices in Payments. Expert insights for a digital payments world. Welcome to our, uh, latest, uh, podcast at uh, Payment Genes. Today we're going to talk about the fleet and mobility area in Europe. A market segment that we focus on a lot from payment, uh, consultancy team. Uh, we executed projects across the industry in EV charging, petrol companies, mobility as a service, fuel guards issuers, etc. And of course the card schemes. So we are very close to this topic. Uh, Visa is very active in this segment with Fleet, uh, 2.0 standards. And our guest is Richard, uh, Campion, head of fleet and business mobility at visa. Uh, thank you for joining. Uh, Richard, can you highlight a bit about your team's role and your place within the Visa organization?

Speaker A: Certainly. Firstly, yeah, thank you for having me, uh, on the podcast. I think it's great to be here. So I'm Richard Campion, as you say. I lead our fleet and business mobility team at Visa. Ah, um, look, very much our aim is to create a payment solution which can work for B2B fleet card issuers. We've got a pan European scope and we sit within Visa's broader, uh, commercial solutions area. Personally, I've been with Visa for seven years now. I started on the merchant and acquirer side before moving into this role within issuing. In my prior role, I was responsible for the rollout of tap and pay on many of the European transit networks. So, yeah, mobility has always been incredibly important to me. And then moving into the fleet and mobility role here now was very much a logical next step for me.

Speaker B: Yeah, perfect that you need a great background to step into the wider mobility area. And indeed also the um, public transport has been transformed from closed to open loop. So there's a lot of similarities in backgrounds, probably with industry. Um, well, uh, we see in the mobility industry a lot of traction for seamless transactions, particularly now that electric vehicles become part of company, uh, uh, fleets and even trucks start to incidentally, uh, become electrified. Uh, how is VISA adapting for this change and growing demand?

Speaker A: Yeah, it's a great question. I think whenever we face an industry change on this scale, it's important to keep in mind the end customer needs and I think all of us within the B2B space, we're building these solutions with the end customer in mind. When we think about fleet drivers and I think consumers, um, we know that from an EV perspective, they end up with multiple cars, multiple apps, multiple different payment methods. And we know that, uh, particularly in the EV segment, payments is actually a barrier to EV adoption at the moment. So I think that there's a real need in order to provide some consolidation on the payment side. Um, EV drivers, I think, still represent the minority of fleets today. And whilst I think EV is expected to grow to somewhere in the region of 50% fleet vehicles over the next five to eight years, there's still obviously a long way to go from where we are today. I think very much. Visa's intent is to make sure that we have a single payment option which can be used across both EV and fuel and mobility as well.

Speaker B: Uh, what major shifts have you observed in the mobility, um, area in Europe over the last years and how does it impact payments?

Speaker A: Well, it's been a lot of fun working in this segment over the last two years and Ward, I'm sure you've seen the very similar trends that we've identified on our side. I think if cities are going to achieve their sustainability targets, then having a public transit infrastructure that's simple, that's accessible, that works for everyone, that piece is essential. And I know that we've seen massive upgrades to transit infrastructure, um, over the past few years. Alongside that, I think a lot of European, uh, governments have implemented mobility budgets in order to incentivize people to get out of their vehicles and onto more sustainable modes of transit. So the broader shift to mobility, I mean, we're already starting to see that within our data. Um, we looked within VisaNet, which is our own processing system, we identified commercial drivers who are using their cards in the fuel and their EV segments. And when we look at that as a data pool, we're seeing increased spend across adjacent mobility verticals. So we're seeing increased usage across rail, across taxis, across micro mobility as well. So this dynamic we're already starting to see within our data. And then in terms of the impact on payments, well, I wonder whether the question needs to be almost turned around. And I think a lot of the trends that we've seen within the payment space, if we think about, um, increased security, contactless tokenization, additional form factors, watches, vehicles, etc. I think those types of trends have then started to impact the mobility space as well, as we see adoption of all of these different payment types within the mobility segment. So I think it's working both ways. I think payments is impacting mobility, mobility

Speaker B: is impacting payments, and even the regulator looks into this with their European green deal and stimulating sustainable and mobility, sustainable mobility solutions. Um, what kind of payments innovations do you bring for the fleet and mobility space to cater for this?

Speaker A: One of the first pieces that we looked at in the uh, transit space visa had an initiative. No uh, person and no place left behind. So making sure that everyone has access to mass transit. Um, that piece I think is key and we spend a lot of time looking at concession payments. In particular as we moved into the fleet space. I think a key piece for us was that we could expand just beyond just the payment experience. So uh, if I think about one of the partnerships that we have is with an organization called Plan A. Uh, Plan A provides CO2 reporting solutions for fleets and other organizations elsewhere. So we wanted to make sure that we could address the payment needs certainly, but also that we have the right partnerships in place to expand beyond just payments. The other piece that I think I'll reference here is the um, push towards enhanced data uh, as well. So we know that there's a huge amount of information which is captured in a standard Visa transaction. I think as we move within the fleet segment, um, we will be capturing even more data which can be used towards um, informing some of those sustainability impacts as well.

Speaker B: Great to hear. Yeah, a lot of conversations about data, granularity of Data and Level 3 and certainly uh, a key topic to open up this uh, this market segment. Uh, we mentioned at the start of the conversation that EV charging is uh, part of the wider mobility development that you're also catering for EV charging related uh, transactions. How do you make uh, transactions more uh, easy to operate? M. Particularly when somebody is driving cross border uh, and really wants to have an interoperable network at hand.

Speaker A: Yeah, it's incredibly complex and I think the way that EV has evolved over the last few years has made it even more complicated. I think again going back to this. Yeah, this overarching theme of keeping in mind um, the end user here, the drivers, be that a fleet or a user, um, or a consumer. I think the important piece is to make sure that people have choice around how they pay. Whether that is um, a close loop card, open loop card in app solution, a different form factor, plug and charge, etc. I think consumers need to have choice in terms of how they pay in terms of fleet 2.0 and perhaps I'll take a second to try and bring this to life. What we did was we took a traditional uh, commercial card with all of the functionality that you would expect from a Visa commercial product. So all of the security element, um, a card which is accepted anywhere where you see the Visa brand, access to virtual cards, instant issuance, tokenization, et cetera. So we took that as the basis of the product and then on top of that we added the ability to manage fuel discounts and also flow a lot of the enhanced data which is required on a fuel card. So information down to SKU level data, ah, number of liters or number of kilowatts, um, which have gone into the vehicle. Because we needed to make sure that Fleet 2.0 worked across both fuel and EV segments.

Speaker B: Yeah, that makes a lot of sense. And uh, when you speak about mobility then it's not a homogeneous market. There are multiple segments out there from international road transport to local, um, commuting, for example. How do you segment the market and are there any specific demands that you try to cater for with your solutions?

Speaker A: Yeah, it's a good question. I think within the fleet segment, um, I'm sure different fleet operators segment the market, um, in different ways. From a VISA perspective, we very much think about this in terms of customer groups. So I think our initial customer group was the oil companies and the fleet card issuers. And as we developed visa fleet 2.0, it was focused towards that, uh, particular segment. But then we also realized that there's significant demand beyond just the oil companies and the fleet card issuers. So lease companies, for instance, serving lighter vehicles. And that's where we probably see a big shift towards the mobility segment as well. In addition to that, ChargePoint operators, ChargePoint operators I think are looking to serve, uh, fleets more broadly. And given the majority of fleets are now mixed fuel, they needed a solution that obviously works within the EV segment and also the traditional fuel segment. And then finally some of the, uh, financial institutions, the banks as well, um, some of them already have fleet, uh, products in place today and they're typically cross selling those from other financial products. So those I think are probably the four customer segments that we identified and very much visa fleet 2.0 can meet all of the needs of those segments.

Speaker B: Perfect. Um, when you designed the VisaFlet 2.0 uh, standards, did you involve the industry in this, like the industry bodies?

Speaker A: Yes, certainly. Um, this is a very complicated ecosystem that has grown up over several years and I think for any solution to be successful, we need to acknowledge all of the impacts across the ecosystem. And that's right the way through from the merchants all the way through to the issuers, the drivers and the fleet card issuers. So yeah, across the ecosystem we've been engaging with not just the industry bodies, but also the different stakeholders, um, that are going to be required to make Fleet 2.0 a reality.

Speaker B: Yeah, and it includes IFSF, for example.

Speaker A: It does include IFSFLO as well. Yep. Visa is a, yeah, a proud member of ifsf.

Speaker B: Perfect. Well in the past um, there were two um, result, yeah two categories of card based solutions in the mobility area. The closed loop solutions which became uh, quite successful in their segments, very specific um, uh, functionality and of course open loop mobility solutions. Um, can you explain why this historically has been grown as a closed loop network? Why are so many closed loop networks out there? Is there a historical explanation for that?

Speaker A: I think that the evolution of the closed loop fuel card payments was driven by the Oraco's desire to create loyalty and that makes complete sense. And we see loyalty solutions across many, many different industries. I think on top of that there was always a need for additional transaction data and spend controls which, which go with that fuel card. So I think that if you like was why traditionally evolved as a uh, closed loop ecosystem. If we think about some of the recent changes which I think we've already highlighted, mixed fuel fleets across both EV and traditional fuel and also the shift towards mobility payments, I think those two have really been the catalysts for change. Um, yeah, that's what the feedback that we've received from some of the fleets that we've been working with. And so With Visa Fleet 2.0 I think it starts to bring together the needs of both the closed loop and the open loop. So if you have all of the functionality from an open loop card, um, the tokenization, the virtual card, the security elements and then you can pair that with some of the discounting and enhanced data functionality, I think you start to see the two areas really come together.

Speaker B: Yeah, it really feels like there's a lot of momentum in the market that all those closed loop issuers start to look at open loop solutions to some extent. Um, and what's the main explanation for this in your opinion?

Speaker A: We often discuss this internally as a team and typically there isn't one standout reason for the transition from closed loop to open loop. And I think it's probably a number of different factors that fit into a broader decision. One of those is definitely around the legacy infrastructure and I know how difficult it is to manage ah, an international payment network that's accepted in multiple locations. It's a huge undertaking to manage that. So yeah, outsourcing it I think makes sense. Um, fraud has typically been a challenge, um, particularly on some of the mag stripe cards. So I think with an open loop product you can reduce the fraud which is present mobility. Again as we've already discussed, being able to capture spend beyond the traditional um, fuel and charging um, into parking into Tolls into adjacent mobility verticals more broadly. And then I think the final one that I flag is probably a shift towards uh, a more digital solution. And yet we know within our own consumer lives the level of expectation that we have from a payment solution has evolved. People are used to using KNOW data at their fingertips, people are used to real time um, information, people are used to payments within their phones etc. That has kind of become the norm. And so I think then when drivers start to commute for work, they're expecting the same level of functionality from their payment solutions.

Speaker B: Yeah, we see a lot of transformation in the fleet management, uh, world as well. Uh, also digitizing a lot, um, telematics is there, uh, with all kinds of new solutions, um, fitting in with modern payment solutions feels like a, yeah, interesting capability to offer to the market. And how are you, uh, how do you feel you are contributing to modernizing fleet management?

Speaker A: I mean we don't have crystal ball, um, but we've, we've tried to future proof the visa fleet 2.0 solution as much as possible. So when we built the thing, yeah, we enabled uh, the fields for ev, we enabled the fields for hydrogen, um, as well. So we can future proof it to some extent. I think the key piece here is around our uh, network of partners and yeah, we've recently launched the Visa Ready for Fleet program, um, where we have access to some of the most innovative providers of specialist solutions in the fleet space. So that would include the fleet management systems, um, in car payments and some of the CO2 reporting platforms I've mentioned previously. I don't think with the best will in the world, um, Visa, uh, wouldn't be successful if we didn't have this network of partners in place that we can bring into some of these discussions and really start to layer some of the enhanced functionality on top.

Speaker B: Great. Um, well, fleet card issuers um, of course are very diverse. Like you mentioned, oil codes, independent specialists, even banks are sometimes engaged. What are the main value drivers for fleet card issuers in their programs?

Speaker A: Main value drivers, I think one of the interesting pieces here is going to be how they can capture um, additional spend beyond just the fueling. So moving into parking tolls, I think that one is straightforward and some of that is already covered today. But moving more broadly to capture additional convenience store spend and then into the mobility segment, more broad. So definitely capturing more spend on the same product. Um, and then I think linked to that, we know that drivers are carrying um, multiple cards today, sometimes up to five cards. We think the average is Somewhere between two and three cards. So having a single payment card that can be used everywhere, um, will enable some of the fleet card issuers to capture a larger share of wallet.

Speaker B: Okay, you mentioned for example the need to cater for level 3 data, so granular data on the purchase. Uh, what are other capabilities that you need to bring to the industry to be a viable alternative for closed loop networks and specifically in commercial road trucking. So the international fleets with trucks, yes,

Speaker A: certainly I think the size of the network is massively important. We know that these vehicles are traveling um, across countries, across borders and yeah, that's ultimately where their spend will take place as well. So we need a wide network. We also need spend controls both in real time and post event to make sure that we can reconcile these transactions together, provide insights for the fleets in order to manage the total cost of ownership. In addition to that security, um, there's still a relatively high level of fraud that we're seeing within this segment. Um, I think with an EMV card, with a visa fleet 2.0 card, we can start to tackle some of that fraud which is in place. And then I think the final piece I'd add is really around a solution for emergency spend as well. So having the ability to unlock various merchant category codes either for a driver to replace a tire, have the vehicle fixed to stay overnight within a hotel. Again we have the flexibility within Visa Fleet 2.0 to manage that.

Speaker B: That really feels like a modernization of um, how people interact in the mobility world and specifically those truck drivers. Um, you mentioned fraud, so that's a good topic to um, continue on. Many of those old school closed loop networks with some limitations when it comes to reach, for example, still rely on Max Tribes. Well it's not some technology that we are used to nowadays. Um, do you see that there's a lot of fraud, that fraud is increasing and is it one of the drivers for the issuers to look into digital payments?

Speaker A: Look, I think uh, fraud is ultimately it's a cost on the P and L and yeah, it's a cost that I think takes a huge amount in terms of um, reconciliation and management in addition to the write offs of the final amount and it eats into profitability. So anything we can do from a payment security perspective to clamp down on that fraud, both at the point of authorization, but also in terms of using some of the data for insights post transaction. Yet that can only help to bring down those fraud levels. And we know the relatively low levels of fraud that we see across commercial and consumer payments within the Visa ecosystem today. So yeah, that's certainly what we're targeting.

Speaker B: Perfect. And Visa is really enabling contactless and digital wallet based payments for this fleet segment as well from a plastic card background. Um, as a final question, uh, next to international fleets and trucks, there's also this segment of people with a lease car from their company. Uh, there's a major trend around mobility as a service which has been around for a while, uh, but also mobility budgets which are made available to employees. In some countries there's regulation like in France. Uh, is this also a segment of the market that Visa is uh, looking at and catering for with frictionless payment experiences?

Speaker A: I think this is going to be a hugely interesting segment to watch over the coming years. Uh, if travelers can have access to all of the information around journey planning, around multimodal transportation, um, cost, CO2 impact, then I think that that unlocks a huge amount of flexibility in the way that we travel and we can all start to travel more sustainably where it's feasible. I always say that the best types of payments are those that are entirely forgettable, um, but still completely secure. So those payments that happen completely in the background that many of us are comfortable with in some of the apps that we use in a day to day space. I would like to think that in the coming years we're going to get to a solution where a travel offering within a city can utilise multiple modes of transportation, including vehicles as well. And then the driver or the user, uh, the rider, uh, is then charged the best amount at the end of that day and they're also given the relevant information to offset their carbon footprint. So I'm very intrigued in terms of where the MAS environment goes over the next few years.

Speaker B: Perfect. I think that's a really nice summary and ending of our conversation. Uh, we covered a lot of different topics but it was great to have you here and I'm looking forward to meet you again soon.

Speaker A: Thank you Ward. Appreciate the time.

Speaker B: Versus in payments expert insights for a digital payments world.