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In recent years, a number of startups have made a business out of providing corporate credit cards to companies. These players compete not only with each other but with legacy providers such as Concur and Expensify by offering automated expense management.
Many of these startups generate revenue from interchange fees, meaning that they receive a certain percentage of each transaction made on the corporate card they have provided. Ramp, for example, is one such company. Some of those startups also make money by charging subscriptions for their expense management software. Brex, which started out as primarily a corporate card provider, made a big push last year into software.
Navan (formerly known as TripActions) offers both a corporate card as well as a subscription to its software. In a twist, the company today is announcing the launch of a new product called Navan Connect, which it describes as a patented card-link technology that gives businesses a way to offer automated expense management and reconciliation without having to change their corporate card provider. For the initial launch, Navan has partnered with Mastercard and Visa, with plans to announce additional network tie-ups in the near future.
The move is significant in that Navan is essentially addressing a presumably large market of companies that would prefer to continue working with an existing bank partner for a variety of reasons but want the option to offer more modern ways to manage expenses. Filing expense reports is by far one of employees’ least favorite tasks, but the rationale behind automating the process goes beyond simply eliminating expense reports – it also is aimed at giving companies more insight into how and where employees are spending so that it can identify ways to trim costs in the future and ensure company policy is applied onto the card.
Now, by integrating Navan’s technology, any corporate Visa or Mastercard user would have the option to do things like set policies and budgets they’re trying to administer and then have all expenses automatically reconciled and filed, according to Michael Sindicich, executive vice president and general manager of Navan Expense.
“When we talk with customers, some of them want our cards and they want our credit, but we also see – especially larger companies – some who have existing banking relationships and corporate cards who want better tools to manage their employees,” Sindicich told TechCrunch. “In the past when you are going with one of the new players, including Navan, you are beholden to taking the cards they issue. But what we’ve done allows us to connect with the Visas and Mastercards of the world and still get that real-time reconciliation.”
Navan appears to not be concerned about its new Connect product competing with its own corporate card offering.
Historically, Sindicich said, Navan has charged licensing fees and software fees for its expense and travel products. It charges trip fees, and sometimes implementation fees. And it makes “some commissions” from suppliers and some interchange commissions from card swipes.
“But for us, it was never about being a bank,” he told TechCrunch. “So, Connect would cannibalize the money we can make from our Navan cards on the interchange. but we were giving that interchange most of it back as rebates to the customers anyway. And I don’t think that we or Silicon Valley has any right to say we are going to innovate by building a better bank against some of these larger banks that are out there. They’re better at underwriting. They’re better at managing capital and raising capital. What Navan can provide is this technology and partner with banks in order to offer this holistic solution. And so that’s where that’s where we’re focusing.”
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