How WEX Has Dramatically Diversified Its Payment Solutions

“Over the last several years in the company’s history we’ve diversified the business so that we have less and less exposure to fuel,” says WEX CEO Melissa Smith. “But as fuel prices go up we do have some benefit from that and when fuel prices go down we do have something negative to that. When we first went public almost 70 percent of our revenues were exposed to fuel prices and now it’s in the 20s.”

Melissa Smith, CEO of WEX, discusses how the company has diversified its payment solutions into areas such as travel, healthcare, and corporate payments in an interview with Jim Cramer on CNBC: 

Wex DriverDash App Makes Fleet Fueling Efficient and Secure

On the field card side of the business, we’ve developed a product called DriverDash, a mobile payment device. People use their mobile phones, they have our app loaded on that, and it uses facial recognition in order to allow someone into the app which turns on the pump. If you’re driving your Ford F-250 and you’re sitting next to the pump, it turns the pump on remotely. So it’s very secure. Then as you fill up your vehicle the information gets transmitted back to us and so we’re collecting data around that transaction.

It’s a savings not just in terms of time but also in the ability to make sure we’re collecting data in the right way that allows the product to work better and making sure that it’s more secure.  It gets turned on at the point that the person hits that pump and then the pump is turned off as they turn off that transaction. It eliminates this concept of white plastic fraud.

We’ve Diversified the Business

We have exposure to oil (prices), although less and less. Over the last several years in the company’s history, we’ve diversified the business so that we have less and less exposure to fuel. But as fuel prices go up we do have some benefit from that and when fuel prices go down we do have something negative to that. We’re very transparent. We talk about what the impact is and even when we give guidance we talk about what we’re assuming around fuel prices.

The biggest thing for us is we’ve diversified the business. When we first went public almost 70 percent of our revenues were exposed to fuel prices and now it’s in the 20s.

Processes Consumer Hotel Payments For Expedia

If you think of a company like Expedia, when we go into the background they’ve got all these payments they have to make to hotels around the world and they’re getting payments in advance by consumers. What we do is make a connection to that individual consumer payment and make a payment on behalf of Expedia to the hotels around the world.

For someone like them or other online travel agencies, it allows them to focus on scaling their business and to not have to worry about this idea of many different payments to make. Also, if that consumer ultimately wants to buy a movie or do something that’s ahead of what they paid for we can block that.

A Fintech Provider For American Express

Aa virtual card means card-not-present, no plastic. We started virtual cards many years ago and the idea behind that was being able to make a payment, typically an online payment, and doing it using an account number but without any physical plastic. You think about this concept of high integration, very seamless, you can facilitate a payment without having a card present and you can do this with huge transaction volumes. We have $76 billion worth of volume running through our company and you can do some of that with virtual cards.

Someone like America Express comes to us because of the technology that we provide as a fintech provider. We want to make sure that we’re providing technology, integrating it through API’s, to businesses, to partners, to financial institutions, individually to companies, a whole host of different types of customer sets. American Express would be using the technology as a piece of their technology stack as they go out into the marketplace.

Using Data From HSA Accounts To Advise Employers and Consumers

Regarding health benefit services, if you have an HSA account or a flexible spending account we’re often the technology that sits in the background to that. When you are making a payment we’re making sure that you’re paying for things that are appropriate so that they’re health-related but also allow them to be made on a tax-deferred basis. We’re accumulating data around your purchases so that we can help advise employers around how much money should you fund into someone’s HSA account. Also, (informing on) how much should you as a consumer be directing into that account.

A lot of what we do is integrate the data that sits in the background and that’s important because it allows companies to do what they want to do. We sometimes grow, sometimes save money, but at the end of the day where we can pull data into the equation and we can show it to customers in a visual way that’s where the wow comes in.