What do medical bills have to do with fleet card provider WEX, except that it would take a lot of trucks to transport them all?
In fact, health care has similar “complexities and inefficiencies” to fleet management, the industry WEX helped pioneer more than 30 years ago, according to Steve Crowley, the company’s chief information officer.
Those two characteristics are the company’s key drivers in determining which industries to approach with a payment solution, he said. And WEX has worked with several, ranging from travel and insurance to education.
Its CEO, Melissa D. Smith, recently won the Woman Driving Innovation in Payments award at the 2014 Innovation Project in Cambridge, Mass., the first of its kind to be given at the ceremony. The award honors the top female leader in the fields of payments and commerce innovation.
The cornerstone to the company’s leadership has been its closed-loop proprietary fuel and vehicle maintenance networks, one of the largest in North America. Its fleet cards are accepted at more than 90 percent of the nation’s retail fuel locations.
The system’s software also enables fleet managers to control purchases in the field and gives them data-and-analysis tools to run their operations and control costs.
Enhanced data
“We leveraged big data” to allow closer management in an industry that had traditionally been operated largely on trust, with trucks on the road and out of sight of managers. Crowley said.
The company’s fleet cards collect information on purchases and driving time, helping management “rapidly get to issues or problems where drivers were out of compliance with policies,” he said.
The system, which moves information from paper to the cloud, also has reduced costs and saved drivers from having to juggle “multiple cards and receipts,” Crowley said.
“All that friction goes away with the card,” he said.
Health care happens to be another industry dominated by paper, Crowley said. You get a bunch of bills in the mail, often about the same procedure.
“There are great inefficiencies in getting to price – what you owe, versus what the provider owes,” he said. “There is dyslexia among providers.”
WEX is introducing an electronic or virtual payments solution aimed at simplifying invoicing for the industry while providing reconciliation and enhanced remittance data.
Eliminating friction
The company also has begun to eliminate even the friction associated with using a card.
WEX recently announced a relaunch of its mobile application, formerly known as Octane, under the name WEX Connect. The service now allows users to find stations in their area based on brand, distance and service type (oil changes, tires, transmissions, etc.). That’s over and above allowing them to locate fueling stations and prices, as they have always been able to do.
Besides this expanded service, the company is evaluating other uses for contactless cards and mobile, Crowley said. “We’re leveraging best practices from Europe, for example,” he said. “We’re moving toward the mobile wallet.”
WEX has been diversifying its business through a combination of organic growth and acquisitions to minimize fuel price sensitivity, the company said.
In 2000, it pioneered a single-use virtual payment solution to address the complexity of reconciling payments in the online travel industry, which has been a key contributor to growth.
The company also has a presence in Australia, Brazil, Canada, New Zealand, and the UK.
MercadoLibre’s fourth quarter results showed double-digit growth in unique active buyers and items sold across the company’s marketplace, along with momentum in its credit card business.
The most recent earnings supplementals, released after the markets closed on Thursday (Feb. 20), detailed that during the fourth quarter, gross merchandise values (GMV) were up 8%, to $14.5 billion, items sold gathered 27% year over year to 525.5 million, and the total payments volumes soared 33% to $58.9 billion.
In a nod to eCommerce momentum, same-day and next-day shipments gained 21%, and the company disclosed that 49% of shipments were delivered in this time frame.
Drilling down into the country-by-country activity, MercadoLibre’s GMV growth, year over year, was 28% in Mexico, 32% in Brazil and 141% in Argentina.
The company’s credit portfolio was up 74% year over year to $6.6 billion.
Unique buyers gained 24% to 67.3 million individuals and items sold per buyer gained 3% year over year, to 7.8. Within FinTech Services, monthly active users surged 34% to 61.2 million. Within that segment, credit cards are the largest portfolio, at 40% of the total credit portfolio, up from a 32% contribution a year ago. For the full year, the company’s credit card business jumped by 118% to $2.6 billion.
Overall credit metrics improved, where past due percentages of non-performing loans — defined as being past due between 15 and 90 days — stood at 7.4%, down from 7.8% in the third quarter, and down from 8.2% last year. Monthly active sellers with credit were 24.6%, up from 14.2% in the fourth quarter of 2023.
For the full year, the company logged a significant milestone, notching 100 million unique buyers on its platform, adding 18.8% through the year.
Shares were up 13% in after hours trading on Thursday.
During the conference call with analysts, CFO Martin de los Santos said that, in discussing the credit card business, “having a solid credit card offering is critical to our ambition of being the largest digital bank in Latin America, and leveraging our unique competitive advantages in underwriting and distribution. So we’ll continue investing in our platform to capture these opportunities even if some time they put short-term pressure on margins.”
All cohorts of the card portfolio are becoming profitable, the CFO said, who added that “the pillars of our long-term growth strategy are based on the relatively low penetration of eCommerce in our region. There is a huge opportunity to offer better financial products to large segments of a population that have been underserved by traditional banks and a digitalization of cash for merchants and individuals.”
During the question-and-answer session with analysts, management noted that credit quality has remained strong, with no deterioration — and in fact, in Brazil the credit card business had the lowest first payment default metrics on record as of the end of last year.
“Essentially, we’re being a little bit more cautious. Nonetheless, we are very comfortable with the level of risk we are taking,” the CFO said. Elsewhere, management commentary on the call noted that eCommerce volumes in categories such as groceries and consumer electronics are performing well.