Piston Technologies Inc., a startup that has built a cardless payments system for commercial trucking companies to buy gas for their fleets, said today it has raised $15 million in Series A capital.
The round was led by FPV Ventures and saw participation from Spark Capital and Pear VC, which backed its earlier seed round. It has now raised $22.5 million to date.
The startup is trying to solve the pain of payments in the U.S.’s massive $900 billion trucking industry, which is still stuck with using commercial payments technologies to buy the oceans of fuel their gas-guzzling fleets require to criss-cross the country.
In practice, this means that fleet operators have to give their drivers fuel cards or even company credit cards to purchase more gas when they’re empty. But this is problematic, as such methods result in a lot of fraud and make it difficult for fleet operators to visualize their daily spending on gas. Fraudulent payments are no joke in the trucking industry, with one report by Wex Inc. estimating that the average trucking firm loses between 5% and 15% of its annual fuel budget due to this problem.
Piston’s co-founders, Chief Executive Vikram Sekhon and Chief Operating Officer Shivam Shah, have experienced this pain firsthand. As former commercial truck fleet operators, they often struggled with issues such as fraud, hidden transaction costs and the huge administrative burden that goes into reconciling payments. It was this experience that convinced them there has to be a better way.
Their solution is a two-sided cardless payment network that connects trucking fleets directly to gas stations. The system authorizes gas purchases for specific drivers and vehicles at the point of sale, using a simple QR code scanner.
The system records every transaction, the amount of fuel purchased and the cost, the time of the sale, the location and so on, ensuring that the company has a complete record. Because there’s no card anymore, there’s no risk of drivers making fraudulent purchases, like buying some snacks along with the fuel at the company’s expense.
As with every good technology startup today, Piston is also leaning on artificial intelligence capabilities. Its platform includes a feature called Piston Guard, which helps to evaluate individual transactions in real-time to provide enhanced protection against fraud.
Companies can set specific parameters and block fraudulent transactions in real time, before they’re processed. There’s also the Piston Analytics Agent, which can help operators to analyze their fuel spending to uncover insights that could optimize the business, without spending hours studying the data manually.
Piston says it provides clear benefits for both truck operators and gas stations. For the fleets, it delivers real-time visibility into gas spending and eliminates the need to issue and keep track of physical cards. For merchants, because of the way the system is linked, it means they gain a reliable and regular repeat customer with lower transaction costs, and the chance to benefit from in-store purchases by the drivers – who’ll have no choice but to spend their own money on those snacks, as is proper.
Sekhon said that card-based payments were built for another era, and are totally unreliable for trucking fleets. Card issuers often describe fuel fraud as a payments detection issue, but really, it’s the cards themselves that are the problem, Sekhon believes.
“We removed the card and built a network that authorizes every purchase for a specific driver and vehicle at the point of sale,” he said. “This round lets us expand that infrastructure until no commercial driver has to ask whether a station accepts Piston.”
Sekhons’ comment betrays an ambitious expansion plan that is already well underway. In the last 12 months, Piston has grown its merchant network by more than 40 times, resulting in an eightfold increase in annual payment volume. The startup boasts an impressive 98% customer retention rate, helped by the fact that its technology is now accepted at more than 2,000 gas stations across 48 states.
Piston now wants to accelerate that expansion, intending to establish its network in every U.S. region within the next 18 months. Once its network is fully up and running, it’ll then be able to think about expanding beyond fuel, into broader logistics payments infrastructure, Sekhon said.
FPV Ventures’ Nikunj Kothari said he’s backing Piston because fuel is one of the largest business-to-business spend categories in the U.S. He pointed out that trucking firms spend billions of dollars on fuel annually, but the vast majority of those transactions are done using outdated infrastructure.
According to Kothari, the most impressive thing is that Piston moves fuel payment money over its own rails, with no card networks or intermediaries in between, which helps to keep transaction costs to a minimum. “Vikram ran hundreds of trucks and felt this pain every day, and Shivam recruited thousands of drivers before they wrote a line of code,” he added. “This is a new payment network in a massive market, built by people who actually lived the problem.”
