U.S. Bancorp has won a prized contract to provide fleet cards for the U.S. Postal Service, the company announced Thursday.
The job includes installing one of the largest fleet card systems in the country. Such cards, which let companies manage costs and control spending on their vehicles, are considered a growth product in the commercial card market, which also includes purchasing and travel and entertainment cards.
Through a subsidiary, U.S. Bank Voyager Fleet Systems Inc., the Minneapolis-based banking company will issue Visa cards that the Postal Service will use to pay for fuel and maintenance of its 170,000 vehicles. The Postal Service estimates that $170 million will be spent on the cards each year.
"This is a real coup for U.S. Bank," said Stanley A. Anderson, president of Anderson and Associates in Arvada, Colo. "This is the largest fleet contract in both the public and private sector ever."
The Postal Service said the fleet card program is one of many initiatives it is implementing to reduce costs. The cards will record all relevant data about a particular car or truck - such as the vehicle identification number, the odometer reading, and when, where, and how much gas was put into it. The data will then be displayed in transaction reports that can be used to negotiate discounts and monitor card usage, the Postal Service said.
"The use of fleet cards is a cost-effective way for the Postal Service to obtain and pay for vehicle management, fuel, and oil," said Donald R. Perrin, fleet card task order coordinator for the Postal Service in Washington. "It's quicker and more economical for a vehicle operator to obtain fuel and oil at any convenient gas station, and pay for it with a single card, rather than carrying a variety of cards and searching for one that a particular station will accept."
The contract came about as part of the General Services Administration's SmartPay program, which lets each government agency choose fleet, purchase, and travel and entertainment card vendors from among five banking companies. The GSA has been working to replace paper expense reports with electronic ones since December 1998, when it started SmartPay. So far U.S. Bancorp, Citigroup Inc., and Bank of America Corp. have won most of the agency contracts. Bank One Corp. and Mellon Bank have won a few.
U.S. Bank, a Visa issuer, has scored some of the government's most prized contracts, and is the largest commercial bank card issuer in the United States.
Under its agreement with the Postal Service, U.S. Bank will provide card issuance, billing, payment processing, customer service, and transaction reports for two years, with an option to renew for the following two years.
The government's card program has also worked to boost Visa's corporate card business. Three-quarters of the government's cards are Visa-branded, and most of the rest are MasterCard.
U.S. Bancorp bought Voyager, the largest issuer of fleet cards to federal and state governments, from Associates First Capital Corp. in September in an effort to strengthen its fleet card offerings.
U.S. Bank has issued purchasing cards to the Postal Service for more than 10 years, according to Daniel J. Frate, vice chairman of U.S. Bank and president of its payment systems division.