Fintech Torpago has a unique way to compete with Brex and Ramp: turning banks into customers

Fintechs often give banks a run for their money, pun intended, when it comes to using technology to improve the customer experience.

Torpago, a commercial credit card and spend management provider, is no different, but with one caveat — banks are who it builds technology for, particularly community banks.

It’s true, Torpago is often grouped with companies like Brex, Mercury and Ramp, all of whom Torpago founder and CEO Brent Jackson said are high-profile card and spend management platforms who have “done amazing jobs.” However, they continue to battle over the same business customer, he added. Instead, Jackson believes Torpago’s competitors are more like Fiserv and Finastra, both offering software to community banks.

“We started as a competitor with Brex and Ramp, as well as American Express and Capital One,” Jackson told TechCrunch. “It allowed us to also build a great product, but we realized early on that this is not the market we wanted to go after.”

That’s when the company launched its Torpago Powered By product in 2023, which incorporates everything the company built for small businesses, but instead of selling it directly, it’s geared for regional and community banks, with under $20 billion in assets, to launch their own branded cards and spend management programs. 

The Torpago Powered By tools and infrastructure enable means that those banks’ to customers don’t have to leave the bank’s brand domain to get sophisticated fintech features. The bank gets fully-branded software from Torpago that integrates with over 200 accounting systems. It can issue virtual cards in real time or physical cards. And it has a dashboard to manage all things related to both products.

For Jackson, this strategy sets up Torpago as a partner with, not a competitor to banks. Banks have all the customers, and they have all the card volume, but “they have the absolute worst credit card tools and technology,” he said.

“We’re actually providing them with an experience that they can be proud to promote, and they can use to drive more fee income, help retain deposits and just get a better customer experience,” Jackson said. “Plus, the access to data is huge as well.”

Torpago says that one bonus for banks over its competitors is how Torpago shares data. “That’s one of the big things we kept hearing from all the banks working with other providers — that it was hard to get reporting and see insights into their own customers and how they were spending.”

Torpago initially secured  2,000 small companies as customers. Since making the shift to banks as customers, that was whittled down to 300 companies while it goes after bank customers. Torpago works with three banks currently and another six it is onboarding over the next two quarters.

Its new market also helped the company secure $10 million in new Series B funding on a valuation of $55 million, Jackson said. The round was co-led by Priority Tech Ventures, a division of Priority Technology Holdings, Inc., and EJF Ventures, with participation from BankTech Ventures and other existing investors. With the new investment, the company has raised around $18 million in equity funding, which includes a $6 million Series A in 2023.

Growth was solid over the past year as well, Jackson said. The company more than doubled its revenue since the Series A raise. Its revenues are generated by interchange fees. It also tracks total payment volume, which also more than doubled from the Series A, he said.

Over the past year, Torpago was rebuilding its infrastructure behind the scenes so that it could cater to banks. The Series B will now enable the company to bolster its implementation and compliance resources as it adds to its product suite. 

Much of this will come in the way of artificial intelligence through large language models meant to help with underwriting, credit memos and risk scores, Jackson said. The company also plans to go after legacy products, like Concur, with an AI travel booking engine so cardholders can book corporate travel through Torpago’s AI chatbot. That product is on tap for next quarter, he said.

Meanwhile, Carey Ransom, managing director of BankTech Ventures, which led the Series A round, told TechCrunch that BankTech and EJF are more like strategic investors. Both have banks in their ecosystem that they will work with Torpago on introductions.

“We know this is not the type of market where there’s only going to be one winner,” Ransom said. “It’s a huge market in need of a significant upgrade across the board, and our banks have both the need and the opportunity to greatly upgrade their capabilities around commercial card and expense management. This is where Torpago has as good of capability as anybody else out there with the desire to be different. Partnering with and through banks is a great way to differentiate their approach.”