Fintechs often give banks a run for their money when it comes to using technology to improve the customer experience.
Torpagoa provider of merchant credit card and expense management, is no different, but with a caveat — banks are what it builds technology for, particularly community banks.
True, Torpago is often lumped in with the likes of Brex, Mercury and Ramp, which Torpago founder and CEO Brent Jackson said are high-profile card and spending platforms that have “done amazing things.” . However, they continue to fight for the same business customer, he added. Instead, Jackson believes Torpago’s competitors are more like Fiserv and Finastra, both of which offer 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 create a great product as well, 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 integrates everything the company has built for small businesses, but instead of selling it directly, it targets regional and community banks, with assets under $20 billion, to launch their own brand. cards and expense management programs.
Torpago Powered By tools and infrastructure means customers of these banks don’t have to leave the bank’s brand domain to get sophisticated fintech features. The bank receives fully branded software from Torpago that integrates with more than 200 accounting systems. It can issue real-time virtual cards or physical cards. And it has a dashboard to manage all things related to both the products.
For Jackson, this strategy defines Torpago as a partner rather than a competitor to banks. Banks have all the customers and have all the card volume, but “they have the absolute worst credit card tools and technology,” he said.
“We’re really giving them an experience they can be proud to promote and can use to increase commission revenue, help retain deposits and just have a better customer experience,” Jackson said. “Plus, access to data is also huge.”
Torpago says a bonus for banks over its competitors is the way Torpago shares data. “That’s one of the big things we hear all the time from all the banks that work with other providers – that it was difficult to get reports and see information about their own customers and how they were spending.”
Torpago initially secured 2,000 small companies as customers. Since the shift to banks as clients, this has dropped to 300 companies, while following bank clients. Torpago is currently working with three banks and will sign up six more in the next two quarters.
Its new purchase also helped the company secure $10 million in new Series B funding at a $55 million valuation, 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 approximately $18 million in equity funding, which includes a $6 million Series A in 2023.
Growth was steady last year as well, Jackson said. The company more than doubled its revenue from the Series A raise. Its revenue comes from interbank fees. It’s also tracking total payout volume, which also more than doubled from Series A, he said.
Over the past year, Torpago has been rebuilding its infrastructure behind the scenes so that it can serve the banks. The Series B will now enable the company to enhance its enforcement and compliance resources as it adds to its product suite.
Many of these will be hampered by artificial intelligence through large language models intended to help with underwriting, credit notes and risk scores, Jackson said. The company also plans to look to legacy products like Concur with an AI travel booking engine so cardholders can book corporate travel through Torpago’s AI chatbot. That product is available 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 will work with Torpago for imports.
“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 that needs a major upgrade across the board, and our banks have both the need and the opportunity to significantly upgrade their merchant card and expense management capabilities. This is where Torpago is just as good as anyone out there with a desire to be different. Working with and through banks is a great way to differentiate their approach.”
