Amex goes beyond cards to appeal to small businesses

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American Express wants to bring more of its technologies and services to the small business market in order to expand its base beyond businesses that only use its payment cards.

Small and medium-sized businesses are an important segment for Amex, accounting for 21% of its total global loan mix and 34% of total card member receivables worldwide in the first quarter ending March 31, 2021. Steve Squeri, President – CEO of Amex, said According to the results of the New York company, the growth of its business activities has been and will continue to be primarily driven by small and medium enterprises.

“A key part of our long-term growth strategy is to deepen our relationships with existing SME clients and attract new clients by offering a range of vendor payment and cash flow management solutions, to times on and beyond the map, giving business owners more tools to help them run their businesses, ”Squeri said.

Amex is not alone in this effort, but it relies on its banking charter to make the process more transparent.

“The three major US card networks have prioritized B2B solutions and have been expanding beyond the card rails for several years,” said Steve Murphy, director of Mercator Advisory Group of its Commercial Payments Advisory Group and ‘business. “The main difference is that Amex is a closed loop system and drives distribution through its end-to-end network ownership. Amex also has a bank and can offer loan finance and supply chain finance, while Visa and Mastercard distribute through their main banking customers and attempt to provide value added card services and increasingly more outside the maps. “

The three card networks all aim to expand their B2B relevance by doing similar things but in different ways, according to Murphy.

“Mastercard offers the Mastercard B2B Hub as part of a partnership with AvidXchange for automated accounts payable,” he said. “It’s about creating a business information exchange and a Mastercard Track directory for buyers and suppliers, which turns into a payment network. Visa is working with Billtrust on a corporate payment network to further automate the cash cycle process through receivables. “

By going beyond its payment card customer base, American Express hopes to build relationships with more small businesses.

American Express One AP’s Accounts Payable Automation platform enables U.S. businesses to pay their vendors using Amex cards, virtual cards, paper checks, and ACH wire transfers. Amex acquired the platform, which was originally called Acompay, from Acom Solutions in 2019.

“We are marketing the platform to existing Amex business customers as well as to companies that do not have a relationship with us, to help them automate their AP service,” said Dean Henry, executive vice president of Amex for corporate finance and supplier payments. .

In March and April, Amex surveyed companies of all sizes in Australia, Canada, Japan, Mexico, UK and US Almost half (47%) of companies surveyed had stated that they plan to automate or further automate their payment receipt process. to business customers over the next 12 months, while 45% of surveyed companies plan to automate or further automate their supplier payments over the next year.

Environmental Landworks Company worked with Amex to automate their accounts payable.

“More and more things are automated these days, so wherever a business can introduce automation, it should,” said Mindy Stewart, office manager and payroll accountant for the company based at Golden, Colorado.

The timing of these efforts stems in part from COVID-19 lockdowns, Henry explained. “Accounting staff could not come to their desks to write and send paper checks. So during the pandemic we saw strong growth in digital solutions.”

In addition to its access point automation technology, Amex works with enterprise resource planning, procurement and accounting platform providers such as Bill.com, Coupa, Sage Intacct, MineralTree and SAP Concur to enable SME customers to reconcile invoices and purchase orders with payments.

Amex offers SMEs the same tools it offers its global corporate clients to pay suppliers who may be on or off the Amex network. By automating and streamlining payment terms, purchasing companies can deal with a wider range of SME suppliers. “Many of the vendors paid through our buyer-initiated payment platform are SMEs,” Henry said.

Because it manages their B2B payments, Amex is able to use its knowledge of its SME clients’ transactions to offer financing, working capital and loans to businesses.

Kabbage, the U.S. small business lending platform that Amex acquired in 2019, is an example of Amex’s one-stop-shop strategy. In the first quarter of 2021, Amex began rolling out Kabbage, which includes a digital business checking account and working capital solutions, to customers with gross annual revenue of less than $ 2 million per year.

Amex wants to replicate Kabbage’s one-stop-shop approach in the mid-sized business sector.

“We can provide merchant financing or 12, 24, or 36 month non-card business loans to midsize businesses,” Henry said. To be eligible for merchant financing, businesses must accept Amex cards, with refunds being collected against their card receivables.

“We leverage the data we hold on our customers’ Amex card transactions and their non-card payments made through our B2B systems, as well as the fact that we have performed KYC on them,” said Henry. “So we allow them to connect and do business with each other through platforms like American Express One AP, and we can also provide them with information about their transactions.”

Amex, Visa and Mastercard offer their business customers the ability to make cross-border payments to foreign suppliers through their networks. But, unlike Amex, Mastercard and Visa have both expanded their non-card cross-border payment capabilities through acquisitions, Mercator’s Murphy said.

“Mastercard’s acquisition of Vocalink in 2016 positioned it as a direct player in real-time payments and to expand its account-to-account transfer capabilities via Mastercard Send,” said Murphy. “Visa is expanding its Visa B2B Connect cross-border payment network with blockchain architecture but using fiat currencies and payment systems existing on the market. It purchased the Earthport cross-border payment service in 2019 and is expanding its Visa Direct account-to-account transfer service. “



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