Extend’s Bouvard discusses:
- The advantages of bank partnerships
- Emerging virtual payment use cases
- The “massive gap” in SME payment services
Virtual card and spend management platform Extend reported rapid growth last year, with the number of active users on its platform doubling and its charge volume tripling. The year also brought several new bank relationships to the platform, founded six years ago, through which it can offer virtual cards, including HSBC, Bank of the West and Bank of Montreal, its first partner to offer the product in Canada. Extend co-founder, COO and CMO Guillaume Bouvard spoke recently to BTN executive editor Michael B. Baker about what’s driving the growth and the “gap” he sees in payment platforms for midsized companies.
BTN: How does your product work?
Guillaume Bouvard: As the term implies in some ways, we extend the capabilities of credit cards. The card we all have in our pockets has not evolved much over the last four years. The last innovation was the chip, which was not done by the card issuers but by Apple and Google, but the business around it has changed quite a bit over the last four years. Extend is basically adding a layer of modern features on top of an existing card. We transform every business card into a spend management platform. If you have a business card in your pocket, you can register it in our app, and two minutes later, you can send a million virtual cards on your own account, and you can empower anyone you want with these cards. We go from a plastic card in your pocket to a ubiquitous digital card you can send anywhere you want.
BTN: What’s the differentiation from other virtual card products on the market?
Bouvard: A lot of what Extend is based on is virtual card technology, but we have created a lot of intelligence and features on top of that. We do it in a way that’s slightly different than other players in the industry. A lot of them are basically competing with the banks, so if you are a business, you have to move your money and bank relationship to them. I worked 12 years at American Express, and I know a lot of businesses do not want to change their bank. We like to be protected, and working with an unknown entity makes us uncomfortable. Instead of competing with the banks, we took it on us to partner with the bank.
BTN: What is your typical customer?
Bouvard: We go to the bank, they see our product and would like to offer it to small and usually medium-sized businesses. We have some very large companies working with us. We have a technology that we put in place that is very light-touch. One of the banks we work with took us one hour to connect with them. We enable the banks, and they usually work with us directly or indirectly, proposing our product to their clients. Our product is only an extension of theirs. We’re not bringing something completely different; we’re just making their product more powerful.
BTN: How big of a network have you developed with banks?
Bouvard: We have half a dozen banks, a little bit more, that we’re working with: medium-sized banks and very large banks. We have a good number in the works that we will announce over the next couple of weeks and months. If you take the top 50 banks, which represent 90 percent of the commercial card volume in the U.S., our product can be used by 55 percent of the small business in the U.S. with their current bank. The reason is because we have done a partnership with their banks. American Express is a very large one.
A lot of clients are always struggling with how to enable an employee who does not have a plastic card. We see a lot of businesses leverage our platform to enable their staff, whether they are contractors, employees or interns, for traveling.”
BTN: What are some of the use cases you are seeing?
Bouvard: A lot of clients are always struggling with how to enable an employee who does not have a plastic card, for whatever reason, to make a business purchase without this becoming such a massive effort. We see a lot of businesses leverage our platform to enable their staff, whether they are contractors, employees or interns, for traveling. During Covid, you saw a lot of people not go back to the office. They were working from home and needed a new chair. Some of our clients would take the card, use their Extend account, load the card and a CSV file with all their employees, and send $400. Everyone would receive a credit card. The employees could buy their chairs, or whatever they needed.
You see a lot of CFOs that don’t want to have to deal with having the same card at 200 different vendors. In your personal life, you have your card at Amazon and at Netflix, tons of different places. But if you are a distributor and have 200 different vendors, it’s way more complicated. I talked to a client who twice a year their card gets comprised, and twice a year they have to go back to their 200 suppliers and change the card. Some are in Pakistan, some are in Indonesia and some are in Colombia, so it’s a process, and it disrupts the supply chain process. He created 200 different cards on Extend and has one per vendor, so if one gets comprised, he just has to turn it off, so it’s beautiful.
BTN: How has your own company grown in recent years?
Bouvard: We took advantage of Covid and grew quite fast. When last year a lot of companies were challenged, where you saw the valuations in the fintech world go down, we took advantage of that to recruit talent. We doubled the size of the team and opened our headquarters in New York City. We did grow quite a bit in 2022, and the intent is to continue to grow and to double our volume this year.
BTN: How big of an untapped market remains for the payments industry?
Bouvard: In one of the surveys we did, 35 percent of all the spend made by employees for their business is on personal cards. There are companies where no one has corporate cards, only the executive suite. People get very frustrated, and we tend to forget, especially when it comes to travel, a lot of people cannot foot the bill. We’re talking about a couple thousand dollars to travel across the country, and some people can’t wait 60 days to be reimbursed. We see it even at our office. We take interns, like every company, and some of them tell us, “I can’t pay for that.” They ask to help with housing or with traveling. Obviously, we have the tools to help them, but there are many places where this is not obvious, and CFOs and executives sometimes just don’t know how to help them.
BTN: What’s on your roadmap in terms of new services or partnerships?
Bouvard: If you look at the payments industry, very often… the bank is for a very large company. The systems they have are really complex, and the company that is served has an army of people. On the other hand, you have consumers and small businesses. The very small businesses, they usually are using consumer products, and that is fine. If you are small bakery and have two people, who cares? The challenge is: There’s a massive gap in between. Most bank platforms for middle-market clients, there’s a massive gap, and the gap is because there is no integration into third-party platforms. There is little actionable insight. There is usually nothing related to people. The focus on the platform is the account, not people. When you are a middle-market business, you need that visibility. These needs, that’s what we’re working on. We have a very exiting roadmap that is not just on the bank side, which is bread and butter for us, but from a development standpoint. We’re going to bring more value to our clients through more actionable insight about their spend.
BTN: What sort of insights are you hoping to bring?
Bouvard: In my company, we have a number of people using Zoom, but we don’t use a corporate account. I don’t know how many people use Zoom. So, Extend allows you to see everyone who pays for Zoom, and identify them immediately—because all this information is there, someone just has to make it more easily accessible—so I can make sure no one is paying twice [and that] people paying for Zoom are still at the company. That’s what we do. We bring insight to the market, and we are developing this middle-market platform we can bring to banks and card networks and card processors, because everyone is eager to have something for these businesses.