EU Truck Fleets Tap Digital Platforms to Keep Fuel, Tolls and VAT Payments on the Move

When it comes to challenges stemming from operating across the highly fragmented European Union (EU) market, no sector is spared.

Transportation companies, for example, can find it challenging to keep up with the many rules specific to the heavily regulated commercial road transportation (CRT) sector in the region.

These include toll charging systems and driver posting rules — how much time they can spend on the road or the mandatory requirements for resting periods — all of which are further complicated by the differences in regulations applied from one country to the other.

It’s this compliance hurdle that the Czech Republic-based firm Eurowag is trying to remedy with its payments and mobility platform, connecting its customers — trucking companies in the CRT industry and their drivers — with toll and energy providers, regulators and shippers and financial services providers.

“It can be very time-consuming to keep track of all of [these rules] and stay compliant,” Tomáš Novotný, Eurowag’s head of group treasury, told PYMNTS in an interview. “But given that we conduct business in most, if not all of [the European] countries, it’s easier for us to aggregate that information and then help customers apply those rules.”

The platform also helps to simplify customers’ operations and remove the need for a manual back office, offering its small- to medium-sized business (SMB) clients fleet management support through fuel cards, toll management and electric vehicle governance, among other services.

Read more: Czech Mobility Payments Platform Eurowag Files $236M London IPO

In its first annual report as a listed company, the Czech payments and mobility platform reported processing about 32.5 million payment solutions transactions and generating €153 million (about $167 million) in net revenue in 2021 across fuel-card payments, toll, tax and other CRT market solutions.

Today, the commercial fleet management service provider, founded in 1995, services a client base of over 15,000 active payment solutions customers and about 83,000 active payment solutions trucks across the 30 countries it operates in.

Filling a Core Working Capital Need

One of the main regulatory aspects of their work is helping customers adhere to value-added tax (VAT) or excise tax refund rules, under which CRT players who perform a journey across multiple EU states are eligible for refunds for some parts of their fuel consumption.

The challenge for companies, according to Novotný, is determining which parts of the journey are subject to the rules and the applicable rates involved. This is where Eurowag assists customers by calculating the refundable part and applying for the refund at the relevant tax authorities on their behalf.

Once an application is put in and there is confirmation on how much the customer is due in three months, for instance, the Czech firm can offer an advance payment and then recover the funds due from the relevant tax authority.

“The good thing about this is that we’re facing sovereign risk so by processing it at a very low financial risk, we can support our customers with one of the most important needs that they have, and that’s the working capital financing,” Novotný said.

According to Eurowag Chief Financial Officer Magdalena Bartoś, most of their SMB customers or transportation companies lack the bargaining power, the trading history or the credit rating that would allow them to access the traditional type of funding on the market. This puts Eurowag in a strong position to fill that financing gap in the industry.

“We have millions of real-time data points that we can use to evaluate the credit risk of the customer — where the customer is, what is their utilization of the fleet — [and] we can provide different KPIs [key performance indicators] and also manage the performance of the customer,” she said in the interview.

Digitization and the Power of Data

According to Bartoś, digitization is one of the key elements of the company’s long-term strategic growth, supported by the recent launch of the Eurowag mobile application and digital customer onboarding, in addition to developing data-rich, technology-based solutions that offer more seamless and integrated products to tackle the key pain points in the industry.

One of those pain points is the lack of tailored, sector-specific information to help medium to heavy truck drivers steer their trucks in the safest and easiest way possible.

“They cannot use the traditional retail navigation systems because those don’t have all of the bridge clearances, on and off-ramp guidance or various regulations [integrated],” Novotný explained, adding that the company’s real-time data solves this important need.

Another key product within their newly launched digital platform is addressing the issue of trust, which tends to be weak in highly fragmented markets like the EU — be it manufacturers having to give loads to a trucking company they know very little about or trucking companies investing time and resources into transporting a load without knowing when and if they will be paid in the future.

Here again, Eurowag can bridge that trust gap by leveraging the data and information it has to effectively assess the track record of the parties involved.

“The use of data can be so powerful to deliver what we do today, but also to deliver solutions of the future,” Bartoś said.

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