MasterCard International's fleet card alliance with PHH Paymentech has signed more than 20 companies since its March 29 introduction.
The MasterCard fleet card "has exceeded expectations from a demand perspective," said James W. Baumgartner, president of the commercial card unit at First USA Paymentech, which in January joined with PHH Vehicle Management Services of Hunt Valley, Md., to establish PHH Paymentech.
That new fleet card venture approached MasterCard, which was "extremely enthusiastic about the potential," Mr. Baumgartner said.
MasterCard then became the first of the major card brands to introduce fleet cards, though competitors have not lagged far behind. The MasterCard product is being issued by GE Capital and PHH Paymentech, based in Salt Lake City.
Some of PHH Paymentech's customers are First USA Paymentech customers who simply tacked fleet capabilities on to corporate card systems, Mr. Baumgartner said. But the majority of the joint venture's customers represent new business.
"We've just signed our largest customer to date-a 14,000-card customer who wants a combination of fleet and purchasing," Mr. Baumgartner said.
As evidence the market is beginning to mature, fleet card competitors have begun pointing to the nuances they believe differentiate their respective products. In the case of MasterCard/PHH Paymentech, Mr. Baumgartner identified an Internet service that lets executives keep tabs on fleet card expenditures no matter where they are and a cobranding tie- in.
Dallas-based First USA Paymentech's British Airways mileage program is available as an adjunct to the fleet card, he said. In another potential bonus, PHH Paymentech is pursuing a fuel rebate program, in which large petroleum companies would give discounts to volume users.
MasterCard is also enhancing the product by offering different tiers of prices to merchants, depending on how much data they capture through the card.
"We strongly believe that data has value and that as merchants provide data, they should benefit in the form of a lower discount rate," Mr. Baumgartner said. "There soon will be different levels of interchange and discounts for merchants who prompt for certain fields, such as driver identification, vehicle number, odometer reading, and product code."
Merchants willing to supply all that information will benefit from a reduced rate "because in the end, all that data is used by our customers to control their costs," Mr. Baumgartner said.
Daniel Middleton, director of card payment services for PHH Paymentech, gave an example of how the card's reporting structure can help corporate fleet managers control costs. Most corporate fleets have a policy that drivers buy regular grade fuel, he said.
"If someone has been purchasing high-grade fuel, with three or four clicks of a button, they can figure out who's been doing that," Mr. Middleton said.
Among other enhancements, PHH Paymentech is planning to add PHH Vehicle Management's maintenance assistance program to the card. Fleet card holders who experience car trouble can call a hot line, which tries to diagnose the problem and recommend a nearby repair station, Mr. Middleton said.
As early as 1992, Mr. Middleton said, PHH Vehicle Management's customers were asking for one-card solutions that combined fleet, purchasing, and travel and entertainment functions in a single product. Back then, "there was nothing we could do," he said. "The marketplace with MasterCard and Visa wasn't ready yet."
Two years ago PHH Vehicle Management surveyed 150 clients and learned they wanted a card with wider acceptance than the PHH fuel card, which was accepted at 120,000 of the nation's 180,000 service stations, Mr. Middleton said.
Under the alliance with First USA Paymentech, the card is accepted everywhere, Mr. Middleton said.
PHH Paymentech is particularly proud of its electronic billing capabilities. For any given corporate employee, "we can strip off all those items that can be billed to the company-like your fuel purchases-and have the company pay us off electronically," Mr. Baumgartner said.
"Then we can also send you a bill for your individual T&E transactions and download those transactions to an electronic expense report so you can pay us off."
Mr. Baumgartner said competition from other fleet card purveyors has had "a minimal impact" so far, but he predicted that would change as the cards continue to catch on.
"This market is so rapidly evolving that we need to keep our focus on developing a product that is unsurpassed," Mr. Baumgartner said. "We need to be continually improving the value to the customers."
Mr. Middleton of PHH Paymentech asserted that his company's Internet reporting capabilities, processing platform, and reservoir of existing customers placed it ahead of the competition.
"These guys are following us," he said. "We're 12 months ahead of the curve."
