Fuel Cards: Open vs. Close Loop

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Which option is right for you?

In the simplest terms an open-loop credit card carries a major credit card logo such as MasterCard or Visa and can be used by consumers to make purchases wherever such cards are accepted, while a closed-loop card can be used to make purchases only from a single company.

The definitions get a little murky as AmEx, for example, could be considered a closed-loop card because the company issues the cards itself and processes their own payments, while a Visa card could be issued by, for example, a banking partner. When it comes to choosing a fuel card, the definitions matter less than the features.

Making sense of the features

“Open-loop cards seem to be the card of the future,” says Josh Ferguson, National Sales Director, Commercial Fleet, Shell Canada. “They like the chip and PIN security, and they like the flexibility. The No. 1 benefit of a closed-loop card for most fleet managers is having control of where their drivers purchase.”

Many providers offer both. ARI Canada marketing manager Peter Nogalo refers to both the cards his company offers as open-loop because of the variety of suppliers at which they’re accepted, but one is more closed than the other. Their internally managed ARI card is accepted at major national and regional fuel suppliers, as well as thousands of local suppliers, and the ARI Mastercard is accepted at every fuel station that accepts MasterCard. Purchases are restricted to fuel or auto-related services, which Nogalo says suits his customers fine—they haven’t expressed any significant desire for a more expansive card.

At Shell, the open-loop Fleet Navigator card is accepted throughout the 1,300-locations-strong Shell network and wherever MasterCard is accepted, which in a pinch allows drivers to fuel up elsewhere, something that may be necessary in rural areas; their closed-loop Shell Fleet Card option is accepted throughout the Shell network.

Both cards offer some attractive perks, including Air Miles rewards and car wash discounts, but the Navigator also offers reduced-rate 24/7 roadside assistance and discounts on purchases at Jiffy Lube. Both have the added security of driver ID validation and odometer prompts, alerts about suspicious activity and, through Shell’s eTRAC system, both offer managers real-time reporting, immediate online restriction-setting and Level III data that helps them control costs; Level III, the most comprehensive data set, may include such things as driver and vehicle ID numbers and odometer readings.

Although the Shell case is different, it’s often a closed-loop card that offers the most significant discounts, but for just about every plus there’s a mitigating minus that must be considered. “If you direct your spending to exclusively one supplier, there’s a large appetite for more discounts, but then you weigh that with the convenience of going to every gas station versus a particular brand—that’s the trade-off,” Nogalo says.

Security concerns

While most cards these days are quite secure, security can be a deciding factor, but again it must be weighed against other potentially conflicting needs. Both the ARI and Shell MasterCard-affiliated cards offer chip and PIN protection, but the ARI card, which offers PIN protection, gives the company the ability to provide new cards at a moment’s notice. While chip and PIN is the gold standard for security, fraud with PIN alone is “really marginal” these days, Nogalo says.

When choosing a provider, you want to make sure they offer a web-based portal system to track fuel spend and budget, and you want to receive notifications for violations. Nogalo says there are no significant

differences in reporting for his company’s two cards. “The platforms are the same, and driven by the fuel supplier. Both provide Level III data,” he says. Both can track dollars spent and at a more sophisticated level, potential violations such as whether more fuel is being put into a tank than the tank should allow, an indication that it may not be being used on the vehicle for which it was intended. “It may be legit,” he says, “but it’s trackable.”

Alerts can be sent based on a number of criteria, including tank violations and the number of transactions in a day; premium fuel reporting can track and report back when it’s not of value for a given vehicle to use that type of fuel.

Limit-setting can get complex and generally depends on the platform, Nogalo says. “Fuel suppliers provide a lot of the limits, but we do have high-limit cards for a certain class of customers that are specific to them, for example for a big hydro truck.”

By integrating fuel usage with telematics, managers can optimize their drivers’ trips. Some platforms that integrate with other sources of data can even monitor other cost-affecting variables, like aggressive driving.

The “must-haves”

“You want convenience, security and reporting,” Nogalo says. “Those are the three keys to any successful fleet fuel card program. It’s really the degree to which [providers] meet those needs. You want wide acceptance and you want them to be difficult to breach.”

Ferguson has a similar holy trinity: flexibility, savings and security. “At the end of the day, a closed-loop card means you have that much more control over your drivers’ purchases. On the flip side, if you need to work outside of the Shell network and want the added protection of chip and PIN and some of the additional savings programs, you would embrace the Navigator card.” Ferguson says he hasn’t seen a customer move from the Navigator to the Fleet card but has seen managers migrate the other way.

Your best bet when deciding on your company’s next fuel card is to forget the definitions and ask a lot of questions. Open or closed, there’s a card out there that will work for you.

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