American Express has been the household name for decades, more or less monopolising corporate credit cards. However, new startups are hoping to disrupt the sector.
American Express Co. has almost single-handedly controlled the world of corporate credit cards and even now is the world’s largest commercial card issuer valuing around $92 billion. The market leader has been revamping its portfolio to offer additional benefits for Uber rides and stays at Hilton hotels; however, this has also led to raising the fees on the cards. Overall spending on business credit cards, especially in the US, is looking to be an increasingly lucrative industry with even the smaller companies jumping on the corporate credit card bandwagon. Due to Accenture predictions, what was a $625 billion industry in 2019, will be a $1.1 trillion industry by 2024.
Venture capitalists are entering the sphere and pouring lots of investment into young FinTech startups. Ones to watch have been Brex, Ramp and Divvy who, together, have raised a combined $1 billion in funding. These new additions are diversifying a previously monopolistic industry and heating up the competition. With each additional company comes an increased offering of perks and benefits shifting from a debt-threatening approach to more of a reward-based system.
Despite its youth, Ramp in its one year has managed to attract over $25 million of funds. As well as offering corporate cards, Ramp is able to recognise redundant spending in order to save companies money on wasted expenses.
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Utah-based Divvy raised $200 million last Spring and has managed to secure millions in debt capital. The company offers additional spending-tracking tools making it easier for employees to monitor their spending.
Last year, this three-year-old startup was valued at $2.6 billion and is looking to be a direct competitor of AmEx. Rather than the old-school requisite of credit history, Brex monitors how much customers have in their bank accounts on a daily basis. If they trust that they have regular cash flow, they are assured that they can also pay off credit card debt. This is making corporate credit cards more accessible for startups.
These newcomers show that American Express cannot just rest on its laurels if it wants to maintain its position as the king of the corporate card jungle. With innovative solutions and better rewards, the corporate credit card sector is looking to undergo some exciting changes within the coming five years.