Payments Company CEO Melissa Smith Braces for a Volatile 2020

Felice Maranz

(Bloomberg) -- Business-to-business payments company Wex Inc. is “bracing for volatility” in 2020, ahead of the U.S. election and as business volume is “just a hair soft,” Chief Executive Officer Melissa Smith said in an interview.

While market sentiment was “gangbusters” last year, Smith said she has her eye on consumer confidence measures and trade talks. Meanwhile, the impact of a potential White House win for Sen. Elizabeth Warren -- now in focus among investors -- would likely be “neutral for Wex,” Smith said on Wednesday, adding “we’re not a bank.”

Portland, Maine-based Wex, with a market cap of about $9 billion, offers payment services for private and government fleets, and for travel and insurance companies. It also provides management services for healthcare benefits.

Consumer confidence may be hurting businesses, Smith said. She noted that the small fleet owner sector has had difficulty, with a glut of vehicle inventory. There’s also been a little softness in travel, she said.

Any changes in the health insurance industry after the 2020 election may not influence WEX’s position, she said, as “even progressive Democrats offer accounts” as part of their plans.

Wex’s shares have rallied 50% this year, versus a 58% jump for FleetCor Technologies Inc., which also operates in the fleet payments arena, and a 16% gain for the S&P Midcap 400 index.

Wex has neither joined nor abandoned other payments companies in Facebook Inc.’s digital currency effort Libra, Smith said. Wex works on blockchain, but has steered clear of cryptocurrencies as the “regulatory environment seems like it needs to be ironed out,” she said.

And Wex has been active in making acquisitions and continues to seek deals, particularly to boost scale, technology and geographic diversity, Smith added. Wex said last week that it entered the Middle Eastern payments market to issue virtual cards in the United Arab Emirates, in partnership with Mastercard Inc. In July, Wex completed the acquisition of the Go Fuel Card business headquartered in Breda, Netherlands. Wex management said the brand has about 200,000 cars in circulation.

In August, Bloomberg Intelligence’s David Ritter said WEX’s Travel and Corporate Payments segment should continue to bolster revenue growth this year after double-digit expansion in 2018, as the company may gain market share in high-growth areas of B2B payments. He saw gains in the fuel-card business persisting in 2019, partly due to new products and large new partnerships with Shell and Chevron. He also noted double-digit gains in U.S. healthcare revenue.

And, as a public company, Wex is itself “for sale every day,” Smith said.

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