Signals: Has fintech remade the corporate card?

For decades, corporate purchasing cards were a stodgy and slow-moving sector of payments. Traditional top bank card issuers like American Express, Citibank, and Chase dominated the space alongside super-regional players like US Bank. In 2017, with the founding of Brex, a new era of corporate card innovation was launched. 

Six years on, the question is: Has fintech remade the corporate card?

Today, there are dozens of corporate card specialists. There are cards for truckers, cards for dentists, and so many more. In Julie’s 2020 Bloomberg article, “New Tech Startups Want to Remake the Corporate Card” she profiled Brex, Divvy, and Ramp. Each remains a major player in the fintech-enabled corporate card space, with the recent addition of Navan (formerly TripActions) and its Liquid Expense platform. For many companies, traditional bank issuers remain key players as well.

Massive amounts of investment (both debt and equity) have funded these key players, and the first round of acquisitions has already impacted the segment. Brex alone has raised $1.5B in capital. Ramp follows closely with $1.4B raised. Divvy raised $417M prior to being acquired by Bill.com for $2.5B in cash and stock in 2021. Despite its late entry into the card space, Navan has raised a total of more than $2.2B. 

Yet, even with the combined $5B+ in investments, not a single one of these companies registers as a top 10 corporate card issuer, according to industry research leader Nilson. The issuers of these cards such as Sutton Bank, Emigrant Bank, and other fintech sponsor banks don’t appear in Nilson’s ranking list of top commercial card issuers. Startup card stalwart Silicon Valley Bank only clocked in at number 20 with $7.7B in volume in 2021. We expect the upstarts to grow in ranking. By email, Brex, Ramp and Divvy stated their annual total payments volume (TPV) exceeds $10B which probably places the companies in between positions 15 and 20. It’s clear these programs are growing, but there is a long way to go. Number 10 issuer Comerica Bank processes more than $32B in TPV each year.

Total payment volume metrics aside; these growing card programs are providing unique user experiences and winning wallet share for startups and small businesses, with a continued push towards gaining share with enterprises. In the payment realm, there are key differences between traditional procurement cards used by major corporations and cards for smaller businesses. A small business card like a Chase Ink or a Capital One Spark card is issued to a business and secured by the business owner’s personal credit. In many ways, these cards look and act similarly to a consumer revolving card. In the corporate card space, the cards are secured by the business’s revenue and credit itself, and often operate on a charge card basis - meaning the bill must be paid in full each period, with no revolving lending capabilities.

For small and unproven businesses, especially startups, the ability to access a high level of credit for ongoing payments without a personal guarantee is very appealing and was part of the initial appeal for companies like Brex. Today, the software layer provided as a part of the card program is a key differentiator.

Two approaches have dominated the fintech path and continue to show differentiation. On one hand, you have a procurement and bill management approach. On the other, you see an emphasis on travel and entertainment-driven expenses.

Brex, the oldest member of the group, has the broadest feature set. With its recent launch of Brex Travel, as well as the earlier addition of a deposit account in 2019. The company has retrenched as of late with a reduced focus on small businesses, while competitors like Ramp stepped in to fill that void. Brex CFO Michael Tannenbaum even said in an interview with us that displacing Concur was more of the focus now: 

Before Brex joined the travel space, Navan made a name for itself with this as its focus. Started as TripActions in 2015, the company was primarily a travel buying platform leading up to the 2020 COVID-19 pandemic. While work on TripActions Liquid, the card platform, was coming to fruition at the start of the pandemic, the immediate stop of corporate travel pushed TripActions to double down on card expenses. 

Much like Amex said back in 2020 when they were viewed as the main competition, Concur has a similar public view. 

“We don’t have a monopoly on innovation, and we welcome newcomers,” Christopher Juneau, Head of Market Strategy at SAP Concur, told us in an interview.

Ramp and Divvy have taken a different approach, with converging feature sets related to card and invoice purchasing. Ramp has emphasized an approach on helping companies save money, acquiring solutions along the way to drive down costs through vendor negotiations and the like. Ramp also introduced an invoice payment management solution that is similar in use to the traditional Bill.com accounts payable product. 

Brex and Ramp have strongholds on technology startups. According to Waseem Daher, Founder and CEO at startup bookkeeping platform Pilot, most startups he services use Brex or Ramp, alongside an existing card such as American Express or Chase. While both companies also state that they serve non-technology companies, it is clear from our experience that they have fewer customers from other industries.

For tech-centric companies today, and likely for other companies in the future, the user experience of a Ramp, Brex, Divvy, or Navan card is substantially superior. Insured Nomads CEO and Founder Andrew Jernigan says of issuing cards to employees on legacy providers, “It’s just a pain. Legacy companies make it hard to do it, whereas with Navan and Brex, it’s just a click.”

Companies are not using only a single provider, however. Much like many consumers, having multiple cards and credit lines enhances the ability of a business to manage its cash flow and payments needs. Brian Aung, CFO of PushPress, says the company uses American Express, Ramp, and Brex, each for different needs. Many startup founders maintain an American Express card for flexibility and travel perks, while having more traditional procurement run through a modern card platform.

This leads us to the question of, as was the case in Julie’s 2020 article, whether the goal is still to displace the likes of Amex. If customers are often using the upstarts AND American Express, that makes it even harder to move the needle. Does that matter, though? Investors certainly seem to think these businesses are doing just fine and still have a lot of potential. Navan is rumored to be preparing for an IPO as early as this year. 

So while aspects of the space have certainly changed since Julie’s original piece in 2020, there’s no sign that Amex or Concur are being displaced. Rather, the past three years seem to be a story of the newcomers working alongside the incumbents rather than replacing them. That’s not to say that’s a bad thing, but it’s much different than the story they were telling when they burst onto the scene.