CEO says Relay captures 75% of diesel payments market after Love deal

Relay Payments’ fuel payment processing has increased 300% year over year, said CEO Ryan Droege. While such a figure would of course be dependent on changes in the price of diesel, the movement in the cost of diesel has been downward over the past year.

The average retail price reported by the Department of Energy/Energy Information Administration on Monday was $3.539 a gallon. It was $4.633 a year ago. That’s a 300% increase despite serious headwinds.

In a statement announcing the Love’s transaction, Relay Payments listed several major diesel merchants that accept the company’s payment system: Pilot (NYSE: BRK-A), Maverik, Yesway, Ambest and Onvo.

Not on the list: TravelCenters of America (NYSE: BP) – one of the “big three” in truck stops, along with Pilot and Love’s. In an interview with FreightWaves in conjunction with the Love’s deal announcement, Droege confirmed that TA currently does not accept Relay Payments.

Carriers listed in the prepared statement as using relay payments include Schneider (NYSE: SNDR), Coyote Logistics (NYSE: RXO) and Old Dominion Freight Lines (NASDAQ: ODFL).

TPV metrics are advertised

Droege declined to say whether Relay Payments has a positive EBITDA. Earnings before interest, taxes, depreciation, and amortization is the financial benchmark most startups look at after a few years to describe their profitability, or lack thereof.

Instead, he focused on total payment volume (TPV) as a metric that Relay Payments is keen to provide and was willing to discuss publicly.

Droege said Relay’s last public disclosure revealed an approximate annual TPV of $1 billion. He said that number has now risen to $2 billion.

Droege said Relay Payments has about 400,000 truck drivers using its payment system, which represents about 100,000 fleets. While many individual truck drivers have multiple payment systems available to them in the form of a digital wallet or in the form of a fleet card, Droege said many fleets using Relay Payments will only use that system because of the efficiencies created by using a single platform.

“And a lot of them asked for Love’s,” Droege said. “They said, ‘We’d like to be able to use Relay to buy our diesel, our oils, our additives, everything that’s in the store.’ So we were able to take our existing network from the last five years and work it out with Love’s.”

Droege added that the reasoning was that “these people would like to have a secure electronic payment method and would like to use it in your stores.”

One of the assumptions: no fraud

One of the first sentences in Relay Payments’ statement about Love’s uses the term “fraud-free” to describe its payment system, which is entirely based on the use of a phone app rather than a credit card.

This eliminates the risk of “card skimming.” Droege described how skimming is done.

“Someone puts a thin layer of plastic over the place where you swipe your card, and it looks exactly like a gas pump,” Droege said. “It’s very hard to tell there’s anything there.”

Droege said that once scammers get that information, they will “clone” it onto another card “and buy diesel as fast as they can until someone takes it.”

Even if the company compensates the losses, the driver’s card is cut off, leaving him or her stranded on the road with no way to pay for fuel or other necessities. A new card may require being transported many miles by a colleague, according to Droege.

No card needed

The Relay system is cardless, Droege reiterated, and some users could be up and running the same day they download the app. He added that Relay Payments stands behind its “no fraud” guarantee.

Droege said that “more people are starting to move in that direction” — toward a phone-based system instead of a card-based one. “We were fortunate enough to be a pioneer and a leader in that.”

Relay Payments started out by handling warehouse payments. However, it has since expanded beyond fuel to lump sum payments, which was a heavily cash-oriented business.

A 2021 capital raise provided the funds to take the company’s system into the world of flat-rate payments. Before digital payments, Droege said, the cashless alternative to flat-rate payments was paper checks, but that took about 40 minutes per transaction. That delay encouraged the move to cash, but it came with its own inefficiencies and opportunities for fraud.

With the rise of digital payments for lumpers, Droege said, “we’ve seen a majority of them move away from cash,” he added, adding that the 10 largest lumper businesses in the U.S. accept Relay Payments.

Relay Payments has not raised additional funding since raising capital in 2021. “We’ve been able to continue to leverage that capital efficiency and rely on revenue from our customers and their growth,” he said.

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