As Wex extends its suite of travel and fleet payments products, the company is addressing the challenges that accompany certain markets.
"We're looking at prepaid solutions a lot. The credit risk in some markets is difficult to do on a charge card," says Mike Dubyak, CEO of Wex, in an interview.
Wex, formerly called Wright Express, offers payment services for corporate travelers, often truck or delivery drivers who purchase gas, repairs or pay for hotels while on the road. The company has made a number of moves in the past year to enter new markets. It established a
"Our biggest focus is on international travel and corporate payments," Dubyak says, adding the company has also expanded in Singapore, Brazil, Spain and Asia in the past year.
As Wex moves deeper into new countries, the different demands and security issues required Wex to offer different cards or services, Dubyak says. While most of Wex's travel business clients in the U.S. use credit cards, most of its international clients use debit or prepaid cards for various reasons, he says.
"In the U.K. for example the very small carriers don't want to pay the large interchange fees, so we go with prepaid cards in that case," says Dubyak, adding the company is also offering a virtual debit card for some larger clients.
Wex also offers risk management tool in new markets. Wex Telematics, a fleet tracking system that helps companies monitor driver behavior, can be used to track the performance of traveling staff. The tool reports purchase locations and expenses such as hotels or repairs. In risker markets, the tool can be used to make sure drivers are making safe purchases and are in a safe location, says Melissa Smith, Wex's president, who will become president and CEO in January (Dubyak will be executive chairman).
The card networks and
"Prepaid products are particularly well suited for fleet and other travel solutions and, particularly in emerging markets, can offer a safer and more secure alternative to cash," says Zil Bareisis, a senior analyst at Celent's banking group. "Another reason why prepaid work so well in the emerging markets is that it doesn't require credit checks and can reach a broader audience."
However, there are acceptance challenges, Bareisis says. "Even though the travel sector tends to be one of the first to accept cards, in many emerging markets, card acceptance more broadly remains low outside of large metropolitan areas," he says.
Wex reported its third-quarter earnings last week. Its total revenue for the quarter of increased 19% to $191.5 million, from $161 million for the third quarter of 2012. Net income to common shareholders was $438.8 million, or $1.12 per diluted share, compared with $14.3 million or $0.37 per diluted share, for the same period last year. The average number of vehicles services globally was about 7.6 million, an increase of 10% from 2012, and total fuel transactions processed were 96.7 million, a 13% increase over 2012. Payment processing transactions increased 16%, to 76.6 million
